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Lender sues claims management company

  • United Kingdom
  • Financial services disputes and investigations


Indigo Michael Limited t/a SafetyNet Credit (“SafetyNet”), a lender providing revolving credit to consumers, has sued The Claims Experts Ltd t/a Impakt Claims (“Impakt”), a claims management company (“CMC”), for breach of its regulatory obligations due to its alleged failure to properly investigate the affordability complaints which it brings. Although the case is limited to the dealings between SafetyNet and Impakt, the case could have wide ramifications for the bringing of complaints by CMCs against financial services firms.


SafetyNet provides consumers with lines of credit based on open banking. SafetyNet is able to undertake a real time affordability assessments of customers’ financial situations by customers connecting their bank accounts to SafetyNet.

SafetyNet alleged Impakt collect information via a standardised survey on its website to support the complaints using a generic set of questions requiring a “yes” or “no” response from customers. Impakt then generates an automated “letter of authority” which is purportedly signed by the customer and sent onto the lender.  Impakt also submits data subject access requests (“DSARs”) in a similar way.

In October 2020, SafetyNet were added to Impakt’s list of lenders on its website targeted for complaints. Between November 2020 and January 2022, Impakt submitted 5,330 complaints and 2,871 DSARs against SafetyNet. SafetyNet was forced to uphold 247 complaints in April 2021 as it risked non-compliance with the eight week deadline for dealing with complaints required of lenders by the FCA. As a result, SafetyNet paid out £93,783.47 on Impakt’s complaints. SafetyNet consider if they were able to investigate the complaints fully, 125 of the 247 accepted complaints would have been rejected.

Since 1 April 2019, CMCs have been regulated by the FCA and must comply with regulatory responsibilities under The Claims Management: Conduct of Business sourcebook (CMCOB) before a complaint/claim is pursued on behalf of a customer against a firm.  Such obligations include taking all reasonable steps to investigate the existence and merits of a potential claim before pursuing it and ensuring they have the customer’s authority to act.  SafetyNet argues that but for Impakt’s breaches, it would not have had to deal with the complaints, or would have dealt with them differently had Impakt complied with its obligations and that this led to loss.  In total, SafetyNet say they incurred significant costs (c.£440,000 and counting) in wrongful pay outs, hiring staff and implementing new procedures to deal with the complaints, and that it lost significant profit because of the disruption and termination of customer relationships, as SafetyNet suspends further borrowing of any customer who makes an affordability complaint.

SafetyNet are now seeking a damages award, as well as injunctive relief and a declaration that Impakt unlawfully submitted complaints and breached its regulatory obligations.


SafetyNet's investigation of the complaints revealed a pattern of alleged irregularities and/or deficiencies by Impakt.

SafetyNet’s allegations include:

  1. 1. Lack of Authority in Letters of Authority

The standard form “Letter of Authority” generated by Impakt was considered insufficient to demonstrate any authority by the customer as the “purported” signature was automatically generated by ticking a box on the Impakt website. During SafetyNet’s investigation of the claims, they found that many of the “Letter of Authority’s” were sent without the consumer’s consent.  Further, many complaints received were submitted by individuals who appeared to have never been customers of SafetyNet.

  1. 2. Insufficient or no oversight or review by Impakt

The complaints were automatically generated on the basis of pre-populated form submitted on Impakt’s website. SafetyNet says a “yes” or “no” binary option for customers filing a complaint is incapable of addressing and/or do not address or take into account the specific features of its business and/or lending practices. The form generated from the survey was unable to establish whether a genuine claim could be made against SafetyNet, and it appears Impakt took no or insufficient steps to assess the merits of the complaint, tailor the complaints to SafetyNet’s product and business model or to adapt its website or complaints processes to SafetyNet’s products.

  1. 3. Inconsistent factual assertations

The complaints were all drafted in materially identical terms, and were generic, repetitive and not tailored to each customer, which suggested that Impakt failed to conduct investigate the complaints. SafetyNet say it analysed in a random sample the difference between the time that the electronic signature of a consumer claimant was purportedly recorded in an Letter of Authority and time that SafetyNet received the Claim. In 511 instances out of 688 Claims, the claim was submitted in 60 minutes or less after the purported signature. SafetyNet suggest that Impakt had engaged in wrongful and unlawful conduct by making claims it knew or should have known had no reasonable grounds to believe were correct contrary to regulation.

  1. 4. DSAR process has no impact or bearing on Claims

SafetyNet believe that the use of the DSAR process had no impact or bearing on the complaints and was put in place to impose an additional financial and administrative burden on SafetyNet. None of the information sought in the DSARs was capable of proving the factual matters in Impakt’s pre-populated website form and in the complaints.

  1. 5. Interference

The complaints interfered with SafetyNet’s business and economic interest in its customers, and in turn with those customers’ liberty to deal with SafetyNet, because borrowing was suspended once a complaint was made.

As a result, SafetyNet has sued Impakt for causing loss by unlawful means arising out of Impakt’s breach of various regulatory obligations, but particularly, its failure to investigate claims.


Financial services firms have been targeted by CMCs for a number of years in relation to all types of complaints, including affordability. Firms will be very familiar with the sorts of CMC practices complained of here, particularly:

  • doubts about the CMCs’ authority to act
  • submission of large volumes of DSARs and complaints designed to disrupt and cause cost
  • automatic generation of templated and generic complaints
  • use of binary questions to generate complaints en masse
  • no investigation of the complaint by the CMC before it is submitted

The claim was only issued recently and so it will take some time before we see how this case ends, but it could open the door for firms to sue for losses caused by regulatory non-compliance by CMCs.  In the meantime, arguably, unless the FCA drives up the standard of CMC conduct via its supervisory and enforcement powers, it is expected that this will not be the last time that a lender seeks to take its own action through the courts.