Settlement Distribution Agent Services

A Settlement Distribution Agent is an independent service used to receive and distribute settlement funds in group litigation or mass claims matters.

Instead of a defendant paying thousands of claimants individually, the settlement amount is paid to a single distribution agent. The agent then carries out the necessary checks and distributes funds to claimants in accordance with the approved settlement scheme.

This approach is commonly used in UK class-action style litigation, consumer redress programmes and regulatory settlements.

This service is suitable for defendants, claims management companies and scheme administrators involved in mass settlement payouts.

It is particularly relevant where there are large numbers of claimants, complex eligibility criteria, or staged distributions over time.

Advisors often recommend a Settlement Distribution Agent where centralised compliance, auditability and orderly payment are critical.

A Settlement Distribution Agent is typically appointed once liability has been determined or a settlement has been agreed in principle.

It is used where the defendant wants to make a single payment and be discharged from further distribution responsibility.

It is also used where settlement funds must be distributed only after claimant verification, eligibility checks or completion of scheme processes.

Paying claimants directly can be operationally burdensome and carries significant execution risk.

Defendants may not have the infrastructure to conduct identity checks, bank verification or ongoing claimant communications. Errors or delays can create reputational and regulatory risk.

Using a Settlement Distribution Agent allows the defendant to make one payment, after which distribution is handled independently and in accordance with the settlement framework.

Mass settlements involve practical challenges that sit outside the core litigation.

These include verifying claimant identity, validating bank details, managing failed payments, handling late claims and maintaining an audit trail that can withstand scrutiny.

A Settlement Distribution Agent addresses these challenges by centralising receipt, verification and payment under a single, controlled process.

The primary benefit of using a Settlement Distribution Agent is clean, compliant and auditable distribution of settlement funds at scale.

Funds are received once, safeguarded and distributed strictly in accordance with the agreed scheme rules.

Benefits for defendants

Defendants make a single payment and are operationally removed from the distribution process.

This provides good practical discharge of payment obligations and reduces post-settlement risk.

Benefits for claimants

Claimants receive payments through a structured process with proper verification and communication.

This reduces payment errors and improves confidence in the settlement process.

Benefits for claims managers and advisors

For claims management companies, administrators and advisors, a distribution agent provides a defensible and scalable payment mechanism.

It simplifies scheme administration and reduces exposure to client-money handling risk.

Settlement Distribution Agent services can be structured in different ways depending on the scheme.

Some arrangements involve a single lump-sum distribution. Others involve staged payments, reserve funds for late claims or holdbacks for disputes or appeals.

The agent may also handle failed payments, reallocations and final reconciliation.

Yes. Settlement Distribution Agent arrangements are almost always tailored.

Eligibility rules, approval processes, reporting and payment sequencing can be aligned precisely with the settlement terms or court-approved scheme.

The service can also be combined with escrow-style holding for specific tranches, such as appeal reserves or regulatory holdbacks.

In practice, all TPMA's work by separating payment from approvals rules.

These approvals may be given in advance (say, where a transaction is taking place, or a dispute has been settled, and a known amount of money needs to be paid to identified parties), or on an ad-hoc basis (where a procurement agent, house manager, interior designer, lawyer or trusted advisor is given permission to spend the paying party's funds.

A specific bank account is opened for each payment scenario, and the funds are held there until (a) a payment request is made; and (b) the approvals conditions are satisfied. Once those two conditions have been met, we carry out our compliance checks and then make the payment(s).

If those conditions are not met, the funds remain held in accordance with the account documents.

We follow the agreed approvals matrix and we do not exercise any discretion beyond ensuring that the approvals conditions have been satisfied.

1. The distribution agent is appointed by the claims management company or scheme administrator.
2. The defendant pays the settlement amount to the distribution agent’s account.
3. Claimant verification and bank checks are completed in line with the scheme rules.
4. Approved claimants are paid in accordance with the settlement timetable.
5. Any reserve or undistributed funds remain held pending further instructions.
6. Final reconciliation and reporting are completed at scheme close.

Only parties authorised under the account documents can make a payment request. This is agreed at the outset and documented clearly, together with any specific approvals that might be needed, say, for payments in excess of a specific threshold, or for payments to certain beneficiaries.

Instructions are usually tied to specific documents, such as a purchase order, pro-forma invoice, invoice, payment certificate, settlement agreement, sale and purchase agreement, court order or other legal document.

We check that the instruction matches the agreed conditions before acting.

This approach ensures that payments are controlled, predictable and not dependent on informal requests or unilateral decisions by one party.

1. Funds are paid into the TPMA.
2. Payment requests are made and approvals requirements are checked.
3. Payments are made.
4. The balance remains in the account.

This simple structure is what makes TPMA's reliable across many different use cases.

We do not provide pooled TPMA's for law firms, estate agents or other professional advisors - instead, a new account is opened for each individual client or matter - this ensures that every client's funds are in their own specific account and that we are able to carry out our required screening, monitoring and ongoing compliance requirements in respect of every individual matter.

When a professional advisor wishes to open a TPMA for their client to deposit funds with us, we onboard the paying party (the client), carry out our mandatory compliance checks, agree the account mechanics (pricing, who can make payment requests, and who can authorise them) and then open the account and provide the unique account details.

Timing depends on the complexity of the parties and the arrangement.

For straightforward structures, account opening can usually be completed within a short period (even on the same day) once information is provided.

Delays are usually caused by missing onboarding information rather than the account opening process itself.

Standard onboarding checks are required.

This includes confirming identity, ownership and control of any entities involved, and the source of funds.

We also need a clear description of the purpose of the account and those parties who will be authorised to make payment requests or authorise payment releases.

In order to open an escrow account, what is typically required is:

• Details of the parties
• Identification information
• Ownership and control details
• Source of funds information
• Summary of the underlying transactions or obligations, and a copy of the contract/agreements
• Agreed payment request and authorisation conditions

If we require any other information, we'll let you know when we give you your quote.

Accounts are funded by the party providing the funds under the agreement. Each arrangement has a uniquely addressable bank account with its own account number and sort code combination, and we are able to accept BACS/CHAPS/Faster Payments and international SWIFT payments.

Funds may be paid in a single amount or in stages, depending on the arrangement.

Once paid in, funds are ring-fenced for the agreed purpose.

We are not able to accept cryptocurrencies, cheques or cash.

Funds are released only when the agreed conditions are met.

The TPMA account opening form specifies what evidence is required and who may make payment requests or authorise releases.

When conditions are satisfied, funds are released promptly and in accordance with the agreement.

If instructions are disputed or unclear, we will not release the funds without the paying party's consent.

Instead, the funds remain held safely in the escrow account while we seek the paying party's authorisation to make the payment.

This approach protects all parties. It ensures that money is not released prematurely and that funds remain available once the position is resolved.

We hold the balance of a TPMA on trust for the paying party. What that means is that if the paying party becomes insolvent, their administrators are likely to make a claim on the contents of the TPMA as constituting funds that belong to that paying party.

What happens if DOS & Co. becomes insolvent?

All TPMA funds are segregated (kept separate from our own funds), safeguarded (protected by law from our own creditors) and kept liquid and unencumbered at the Bank of England. In the event of our insolvency, we have set aside regulatory capital that will be used by our administrators to 'unwind' our affairs - this will usually involve returning the funds directly to the paying party.

Funds paid into an escrow account are held separately from the money of any other parties and separately from our own funds. They are not mixed with operational accounts.

All of our TPMA funds are held liquid and unencumbered at the Bank of England. This means that there is no counterparty risk (the bank does not lend out funds, so a 'run on the bank' is not possible).

The TPMA account is set up specifically for the purposes agreed in the TPMA Account Opening agreement. Funds can only be used in line with that agreement and cannot be applied for any other purpose.

We are regulated by the Financial Conduct Authority for the provision of payment services. This means we are required to meet regulatory standards around governance, systems, controls and the handling of client funds.

Where TPMA arrangements involve regulated payment activity, those activities are carried out within that regulatory framework.

In practical terms, this combination of regulation and contract provides structure and oversight, while still allowing arrangements to be tailored to the needs of a specific matter or project.

Third-Party Managed Payments are designed to follow agreed payment rules, not to make judgments or resolve disputes.

We do not decide whether a payment should be made beyond checking that the agreed approval conditions have been satisfied.

We do not interpret contracts, assess performance, verify the quality of goods or services, or exercise discretion over how funds are spent.

If approval conditions are not met, or if instructions fall outside the agreed rules, payments are not made and the funds remain held in accordance with the account documents.

Pricing for Third-Party Managed Payments is usually based on the complexity of the arrangement and the level of activity on the account.

This typically covers account set-up, safeguarding of funds, ongoing operation of the account, processing of payment requests, compliance checks and reporting. Where payment volumes are higher or approval structures are more complex, pricing reflects the additional administration involved.

All pricing is agreed in advance, so parties have clarity on costs before funds are paid into the account.

If a payment request does not meet the agreed approval conditions, the payment is not made. The funds remain held in the account in accordance with the account documents.

If there is uncertainty, dispute or missing information, we pause processing and seek clarification from the paying party. We do not release funds unless the agreed conditions are satisfied.

This approach ensures that errors, informal requests or unilateral instructions do not result in unintended payments.

dospay provides a specialist, escrow-first approach to managing payments neutrally and transparently. We are structured to hold and move funds strictly in accordance with agreed rules, without exercising discretion or commercial judgment.

Our digital platform provides visibility, auditability and control over payment flows, while keeping funds segregated and protected. This makes it easier for parties and advisors to manage complex payment arrangements with confidence.

Using dospay allows parties to separate payment mechanics from decision-making, reduce operational risk and avoid the need for one party or advisor to hold and control funds directly.