Court agrees £25m Stagecoach settlement in lawsuit claiming it overcharged rail passengers

The UK competition court has approved a settlement that could compensate up to 1.4 million South Western rail passengers.

A £25 million settlement between Stagecoach South Western Trains and consumer rights campaigner Justin Gutmann has been approved by the Competition Appeal Tribunal.

South Western train companies – including Stagecoach South Western Trains and First MTR South Western Trains – were accused of overcharging 2.1 million rail passengers in a £57 million lawsuit filed by Justin Gutmann.

This settlement only relates to Stagecoach South Western Trains who operated the South Western rail franchise between February 1996 and August 2017. The trial against First MTR starts in June. 

Stagecoach was being sued for £39 million for its part in allegedly overcharging rail passengers by not making ‘boundary fares’ sufficiently available to customers who also bought TfL Travelcards.

Justin Gutmann, a former Citizens Advice executive, told Consumer Voice:

‘We are happy to have reached an agreement with Stagecoach to make available £25 million of the claimed £39 million for distribution to its customers.

‘This is money in the pocket now for 1.4 million Stagecoach South Western Train customers and avoids a lengthy trial.’

The company agreed to the settlement without any admission of liability and its South Western customers will soon be able to make a compensation claim. A spokesperson for Stagecoach Group said:

‘We are pleased that the Competition Appeal Tribunal has approved the collective settlement that we have agreed with the claimant in this long-running case related to historic matters.’

This major settlement is the first-of-its-kind to be made available for affected consumers to make a claim. But it doesn’t come without challenges.

‘We need to get 1.4 million rail customers to step forward to make a claim for compensation for ticket purchases made over seven years ago,’ said Gutmann.

Are you a South Western train customer?

The South Western rail line runs trains between London (Waterloo station) and major towns and cities in the South West. 

These include Reading, Woking, Guildford, Portsmouth, Basingstoke, Southampton, Bournemouth, Weymouth, Salisbury, Exeter, Bath and Bristol.

Sign up so we can tell you how and when to claim against Stagecoach, and keep you informed of the trial against First MTR.

What are boundary fares?

Boundary fares allow passengers who own a Travelcard to get discounts on tickets to take them from the boundary of their travelcard to their final destination. 

So, if you own a zone 1-4 Travelcard but need to travel between Waterloo and Reading, you should be able to buy a fare from the edge of zone 4. 

Gutmann claimed these cheaper fares are not easily available online and rarely offered at a ticket office. 

Who can claim compensation now?

‘Stagecoach South Western Train customers who believe they didn’t have boundary fares made available to them when travelling outside their TfL Travelcard zone to stations like Ascot, Winchester and Guildford may be able to make a claim,’ Gutmann said.

Rail passengers who bought tickets at any point for South Western Trains to and from London from 1 October 2015 to 20 August 2017 could be eligible to claim compensation now.

To claim, you must have held a valid Travelcard for us within one or several of TfL’s fare zones, and the rail fare you paid for will have overlapped with these zones. You can claim for yourself or for someone you bought tickets for.

A trial will begin in June against First MTR South Western Trains – the current South Western Rail Operator – and who has held the South Western rail franchise since 20 August 2017.

How much compensation can be claimed for?

‘This £25 million settlement will be divided into three pots – with claims under each pot requiring different levels of evidence,’ Gutmann said.

‘There is £19 million in pot 1 for those able to fully document all journeys being claimed for, the £4 million in pot 2 will require some proof of evidence, and the £2 million in pot 3 will just require a statement of truth about relevant journeys.’ 

Our table summarises how much you can claim and the level of evidence needed to make your claim:

Settlement allocationEvidence requiredValue of claim
£19 millionEvidence of all journeys for which you a making a claim for – this can include receipts or bank statementsUnlimited
£4 millionProof of purchase of a relevant TfL travelcard or relevant fareUp to £100: £5 for each claim up to 20 claims
£2 millionProof of residence and signed statement of truthUp to £30: £5 for each valid claim up to 6 claims

‘Any amount that is unclaimed in pot 2 will transfer to pot 3 and vice versa,’ Gutmann said.

What happens to unclaimed settlement money?

When cases like this are won in court any compensation awarded will typically reflect the entire loss incurred by all affected people. 

The chances are that not everyone affected – which can be millions of us – will make a claim for compensation. The law says that any money left over must go to the Access to Justice Foundation to be distributed to legal charities in the UK.

This is not the case for claims that are settled in court.

The company will be notified of how much has been claimed by Stagecoach customers and non-ring-fenced payments used to cover the costs of Gutmann’s team. Anything left will be kept by the company.

It’s unknown at this stage how much money would go back to the company. Gutmann said: ‘We don’t know what the likely take-up will be overall or against any of the pots – we will likely be disadvantaged by the age of the claim.’  

The overall value of the claim – on average £28 for every affected person – and the requirement to provide full evidence of ticket purchases made over seven years ago could leave large sums of money unclaimed. 

There are still advantages to settling claims like these. Hodge Malek KC, the lead judge at the settlement hearing, said settlement should be ‘encouraged’:

‘Plainly there is a strong public interest that the courts are not overburdened with cases that could otherwise be settled.

‘Settlements provide the parties with finality and the risks for both sides are ended. Everyone knows where they stand.

‘Litigation is inherently uncertain and expensive, and so this Tribunal, whilst scrutinising the application for the order, starts off with the premise that there is a public interest in encouraging settlements.’

We asked Stagecoach to comment on its decision to settle the claim and what its plans would be for any unclaimed money given this group of consumers are likely to be hard-to-reach. 

A spokesperson said: ‘As legal proceedings are ongoing, we will not be making any further comment on this matter.’

It has agreed to pay £750,000 to help find affected rail passengers. And Stagecoach customers are encouraged to contact their bank if they don’t have receipts.

‘Should a claimant wish to provide evidence for pot one then if they don’t have receipts from their purchases they can in most cases get transaction details going back 10 years from their bank accounts,’ said Gutmann.

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