The second design by John Ramsbottom while he was in charge for the LNWR was a 2-2-2 express locomotive with a wheel diameter of seven feet six inches. This could be described as a simplified and therefore cheaper variant of the locomotives of its predecessor Alexander Allan. Officially this class was named the Problem class after the first production locomotive, but it is also known as the Lady of the Lake class. This can be explained with the locomotive of the same name that was put on display by the LNWR at the 1862 World Exhibition in London. So the name quickly caught on in the public eye, so that this name was associated with the class.

The locomotives, which were initially painted green, stood out with their slotted splashers and apparently had a short wheelbase due to the large driving wheel diameter. Despite the high line speeds, there was initially no weather protection for the cab. They were the first locomotives to be fitted with tenders with a scooping device for catching water on the run. The traditional tenders with 2,000 gallons of water initially used were replaced with scoop tenders that only held 1,500 gallons. Another innovation was an injector based on Henri Giffard's design, only the first ten had a crosshead water pump.

The locomotives were mainly used on the Irish Mail Trains, which collected mail from overseas and Ireland at Holyhead and brought it to London at a high average speed and without many intermediate stops. It was on this service that the number 229 “Watt” became part of the so-called “Trent Affair”. On January 7, 1862, during the American Civil War, due to a diplomatic disagreement, a telegram from the British ambassador in Washington had to be sent to London as quickly as possible. After arrival in Ireland and the transport to Holyhead, two locomotives took over the transport of the mailbags one after the other, of which the “Watt” had taken over the first section to Stafford. Thanks to the water troughs, they just managed to make the journey from Holyhead to London in the promised five hours, delivering a record-breaking performance. The “Watt” completed its 130 miles in 144 minutes.

Other Problem Class services were express trains in the Manchester, Liverpool and Crewe area. One notable feature was an a tendency to yaw around the vertical axis at high speeds, which probably had its origin in the relatively short wheelbase. Starting in 1873, Webb subjected these locomotives to some conversions, in which a cab roof, different chimneys, a black standard paint finish, a steam brake for the wheels of the locomotive and closed splashers were used. A more extensive rebuild only took place between 1895 and 1897, when the first locomotives of the class had already been in service for 36 years. They received a larger boiler and thicker tires, which increased the wheel diameter by 1.5 inches. Locomotives converted in this way were often used as pilot for heavy express trains, often reaching speeds of more than 80 mph. They were replaced between 1904 and 1907 by the Precursor Class developed by Whale, which now eliminated the need for double-heading.