A north-west firm submitting claims without client permission would have been fined £65,000 – if it had not already closed.

The Solicitors Regulation Authority revealed this week that it had decided to impose one of the biggest fines in its history against Legal UK Services Limited, based in Altrincham. But the regulator said that with the firm in liquidation, enforcing the fine would reduce the money available to general creditors.

‘On the facts of this matter there are exceptional circumstances in the public interest to reduce the level of the financial penalty to zero,’ said the SRA.

The financial claims firm closed in February and its live cases transferred to a neighbouring practice. The SRA had said that it was in contact with the firm to protect the interests of clients and former clients, but it has now emerged that the regulator was also in the midst of disciplinary proceedings over how claims were handled.

The SRA notice today said Legal UK Services had failed to obtain the express consent of clients before submitting claims on their behalf, and failed to provide full information to clients about the costs they may be liable to pay.

Clients were not advised they could seek free assistance from the Financial Ombudsman Service to pursue claims themselves, and the firm failed to maintain client ledgers across all matters.

The SRA said the firm’s business model was based on making bulk claims involving large numbers of clients and claims against multiple defendants.

The firm used an online automated process to enter retainers with clients and to submit claims to defendants.

From March 2020 to September 2021, Legal UK Services submitted 100,292 claims: around two-thirds were packaged bank account claims and one-third were home credit claims.

Over the same period, the SRA received complaints from 13 organisations, including lenders and the Consumer Credit Trade Association, about how the claims were conducted.

The regulator said the rule breaches had the potential to cause ‘significant harm’, with vulnerable clients exposed through the automated system for submitting bulk claims.

The SRA added: ‘The firm should have been aware of its obligations to obtain meaningful and informed instructions from clients, provide clients with important information about their other options and about the costs which the firm may charge them. It’s failure to do so showed a concerning lack of judgment.’ 

The firm was directed to pay a fine of £65,322 and costs of £1,350. It was accepted that the business is no longer trading and would not be in a position to pay any fine. If the financial penalty had been enforced, the money would have been taken from the firm’s liquidation.

 

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