Law Commission to consider consumer class action regime

The government has set the wheels in motion for a potentially significant expansion in class actions - with an emphasis on 'proportionate cost'. The Law Commission today announced the beginning of a project, sponsored by the Department for Business and Trade, to 'consider the potential introduction of a consumer class actions regime'.

Such a jurisdiction could operate alongside the collective action opt-out regime enabled for competition cases by the Consumer Rights Act 2015. This has attracted criticism for its high costs and paucity of compensation received by class members. According to the commission, the new project will identify the benefits and risks associated with a consumer class actions regime, 'having regard to other available mechanisms such as public enforcement action and alternative dispute resolution'. 

Objectives of any new regime would include improving consumers’ access to redress - including ensuring that damages are distributed - as well as 'promoting the efficient conduct of litigation at proportionate cost'. The project will make recommendations as to the design of such a regime, were one to be introduced.  

Work on the project is due to begin this autumn. In the meantime the Law Commission is seeking responses to an initial scoping questionnaire. Questions include: 'What features should be included within the design of an opt-out consumer class actions regime to ensure that it promotes the efficient conduct of litigation at proportionate cost?' and 'What features should be included within the design of an opt-out consumer class actions regime to ensure that it does not promote speculative claims that are without merit?'

The deadline for responses is 30 October. 

Seema Kennedy, executive director of industry-funded campaign group Fair Civil Justice, said:  We welcome initiatives aimed at protecting consumers and look forward to engaging with the Law Commission's consumer project. The evidence both internationally and within the UK’s current class action framework demonstrates that litigation-driven solutions - especially opt-out claims - rarely result in meaningful compensation for consumers at scale. We hope the Law Commission will consider non-litigious solutions.'

Martyn Day, co-president of the Collective Redress Lawyers Association (CORLA), described the announcment as 'a timely and important step towards closing the UK’s justice gap'.

He added: 'At present, the avenues open for large groups of individuals with the same claim to take legal action against companies are limited, so a mechanism that makes it much easier for those groups of individuals to club together makes great sense. It is also a step in the right direction in terms of us not being left behind by our continental European neighbours who are implementing the EU Representative Actions Directive that allows opt-out cases to be brought on behalf of consumers.

'There is no doubt that a well-designed consumer class actions regime will strengthen access to justice and ensure better corporate accountability in this country. We strongly encourage claimant law firms to engage with the consultation process and contribute evidence that will help shape a fair and workable regime.'

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