This week’s Times article on the long-running Mastercard class action [Mastercard settlement casts doubt on future class actions] was a fascinating read, but beneath the headlines lies a growing threat to the UK’s investment climate and business competitiveness.
After nearly nine years of legal proceedings, the long-running class action against Mastercard has ended in a £200 million settlement. Of that, just £100 million is available to consumers, with individual payouts expected to range from £45 to £70. The remaining £100 million is earmarked primarily for lawyers and litigation funders.
The original claim was for £14 billion.
Let that sink in: a case that produced modest compensation still inflicted nearly a decade of legal uncertainty on a company that employs thousands, serves millions, and invests heavily in the UK economy.
This is not just a one-off anomaly. It’s a warning.
The Real Risk: The Chilling Effect on Investment
The Mastercard case is being described by some as a legal milestone. But to many in the business community, it looks like something else entirely: a system that allows high-stakes legal action against productive companies with very little oversight, and often very little return to consumers.
Here’s the problem:
- Corporates in the UK now face the constant threat of mass legal claims, often brought on behalf of millions of people who never opted in, and frequently for alleged wrongs dating back decades.
- These claims are often financed by offshore litigation funders, whose goal is not justice or consumer restitution, but profit – often flowing back out of the UK entirely.
- Most of these funders employ very few people, typically operating from a few desks in the City, with minimal accountability to UK stakeholders.
This creates a system where UK-based businesses – many of them major employers or SMEs – carry all the legal and reputational risk, while those driving the litigation contribute little to the economy.
Why It Matters for UK Growth
The consequences are real and immediate:
- International businesses may think twice before expanding or investing in the UK, especially if the risk of retrospective, headline-grabbing class actions becomes embedded in the landscape.
- Homegrown companies may reduce innovation, wary of the future legal exposure that can arise even from legitimate commercial practices.
- Capital may move elsewhere, toward jurisdictions that better balance access to justice with fairness for businesses that operate within the law.
At a time when the UK is seeking to restore growth, attract investment, and become a leader in tech, energy and financial services, we cannot afford to allow a litigation model to undermine business confidence.
What Needs to Change
The Mastercard case – and others like it – show that reform is overdue.
We need:
- A rethink of the UK’s opt-out collective action regime, which currently enables vast claims with limited scrutiny.
- Stronger judicial oversight of funding structures, particularly where returns are extracted offshore and consumer benefit is minimal.
- Clearer boundaries to prevent retrospective legal actions from destabilising companies acting in good faith.
This isn’t about protecting corporate misconduct. It’s about ensuring that the legal system rewards legitimate economic contribution – not speculative litigation.
A £70 Payout, but a High Price for the UK
The Mastercard case ends with some consumers receiving a small windfall. But the true cost may be felt in boardrooms and investment committees for years to come.
If UK civil justice becomes a magnet for offshore litigation funders and unaccountable legal speculation, the signal to the world will be clear: the UK is a high-risk place to do business.
It’s time to restore balance, not just in the name of fairness, but in defence of jobs, investment, and long-term economic growth.
