Cheques that were to be paid to victims of the killer dust asbestos have been stopped by a bank in the wake of the collapse of one the largest employer liability insurance companies.

Just one week after Thompsons Solicitors warned that the tens of thousands of suffers of asbestos-related disease waiting for their compensation payments could be hit by Iron Trades Holdings Ltd going into liquidation, a bank has stopped thousands of pounds worth of cheques issued by Iron Trades to the law firm.

The action confirms the speculation that asbestos victims who have waited years to be compensated for being poisoned by their employers will now suffer further in the wake of the financial collapse of the insurance firm.

Thompsons, the largest specialist personal injury and trade union law firm, was able to honour the first five cheques stopped by the Nat West Bank by paying the clients out of its own funds. But to continue to do so will be impossible.

Compensation payments should be made immediately to asbetsos victims

Tom Jones a partner with Thompsons Solicitors called for urgent action by the insurance industry to ensure that compensation payments are made immediately to the victims of asbestos. He said the government should intervene if the insurers did not act.

"The insurance industry, which was happy to take the premiums when times were good must now pay out to these men poisoned by the industries paying those premiums. Anything else will question the whole basis of insurance. If the industry does not take action then the government must intervene to ensure that thousands of people, many of whom are dying, are not left waiting for compensation for their suffering while the future of Iron Trades is dealt with by the liquidators. Any delay in compensating these men will be a double tragedy.

"There is a need for the insurance industry to get its act together to protect asbestos victims when their members default on their obligations. We will be pressing the government to look into events leading to the Iron Trades collapse."

Walter Cash, a former pipe fitter at British Steel Llanwern, received his compensation cheque for £20,000 last week, paid by Thompsons. The firm's financial department subsequently discovered that the cheque paid to the law firm by Iron Trades had been stopped.

"I'm one of the lucky ones," Mr Cash of Newport, South Wales said. "My lawyers were able to make arrangements to meet the cheque that bounced. But they and other solicitors firms cannot keep doing that so what happens to the other victims waiting for their money?

"I am so angry that we can be treated in this way by a financial institution. It is time that insurers and politicians saw the real human lives behind their figures."

Notes to editors A background briefing on the financial collapse of Chester Street Holdings, formerly Iron Trades Holding Ltd) is available.Mr Cash is available for interview.