The government envisions a ‘swifter and simpler’ opt-out collective actions regime. An Access to Justice Foundation panel discussion also looked at raising public awareness and class action representatives.
The opt-out collective actions regime has reached a critical juncture 10 years after its introduction, as the government begins sifting responses to its consultation on proposed reforms to make the regime ‘swifter and simpler’.
Of particular interest to the legal sector are the reforms in chapter 1 of the consultation, which deals with bringing an opt-out claim in the Competition Appeal Tribunal (CAT), financing a claim, alternative routes to redress and the distribution of damages.
Proposals include a higher threshold for certifying a claim, permitting damages-based agreements, requiring budgets from claimant and defendant following certification, empowering the tribunal to encourage mediation, and dividing unclaimed damages between current beneficiary the Access to Justice Foundation and the UK Consumers’ Association.
The government said responses to a call for evidence last year highlighted a ‘particular tension’ between the need to preserve access to justice and a route to redress, and the need for legal certainty and proportionality for business. Responses to the consultation are likely to reflect that split.
However, a panel discussion organised by the Access to Justice Foundation highlighted two issues unlikely to divide opinion.
The first is the need for further guidance on the role of class representatives.
Beverley Robertson, legal and policy officer at the Class Representatives Network, told the event that the class representative is not just a figurehead. She said: ‘It is very clear now that the CAT expects the class representative to be actively running the claim. They need to be on top of everything the lawyers and economists are doing, fully on top of funding arrangements. They need to be making difficult judgement calls about things like strategy in relation to the case, negotiations around settlements. If they are found wanting in any of these areas, they will be robustly criticised.’
The event heard that the role carries a financial risk if, for instance, there is a disagreement between the class representative and litigation funder. Robertson referred to the dispute between class representative Walter Merricks CBE and litigation funder Innsworth over the £200m Mastercard settlement. That dispute was resolved, paving the way for Merricks to distribute £100m to members of the opt-out class later this year.
The government has asked for views on whether changes to the CAT rules or updates to accompanying guidance would be helpful in clarifying the requirements of class representatives set out in case law.
The second issue unlikely to divide opinion is the need for greater public awareness of class actions. An Ipsos survey found that only 17% of Britons have ever sought any form of compensation, and just 8% have done so through a class or collective claim.
The government is measuring the regime’s success by the returns seen by class members.
‘The opt-out regime was created to provide a route to redress for consumers, including small businesses. There are additional benefits that come with an effective private enforcement avenue, such as deterrent effect and disgorgement – but genuinely bringing redress within reach of the consumer (including businesses) is our priority,’ the consultation said.
The government noted that in the boundary fares class action, there was less than 1% take-up by class members, equating to £216,000 out of a potential £25m reaching consumers. ‘This is one particular claim, with one particular class, and it cannot be viewed as an indication of how all other claims may proceed. However, the aspiration of the regime must be to achieve a greater rate of returns to class members than was seen in this case,’ the consultation said.
Nikki Stopford, co-CEO of Consumer Voice, an organisation set up to raise awareness of claims, said: ‘People are not out there actively looking. We need to work together to raise awareness.’
Trust is another issue, Stopford added. People will receive emails about class actions telling them they are owed cash and asking them to provide personal information – which also happen to be signs of a potential phishing scam.
The CAT is creating a new page on its website that lists and provides links to live claim websites to enable class members to confirm their legitimacy. But the government is open to further ideas on how distribution can be maximised.
Law firm Mishcon de Reya, which has extensive experience of collective proceedings, has suggested in its consultation response that defendants play a more active role, such as providing contact details to the claims administrator or making direct payments to class members.
The consultation closed on 25 September. Cabinet Office guidance states that departments should aim to respond to consultations within 12 weeks.
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