Plans to introduce a code of conduct for third-party litigation funders have moved a major step closer after a high-level summit, the Gazette can reveal.

The code, which will be endorsed by the Civil Justice Council (CJC), will set minimum standards of behaviour and outline the areas the contract between funder and client should cover.

As an incentive, funders that sign up to the code will not be required to hand over any money for security for costs when such an order is made.

The Solicitors Regulation Authority will also consider whether to introduce a rule that prevents solicitors from dealing with funders that are not either signed up to the code or regulated by the claims management regulator.

Last week’s summit, organised by the CJC, considered a draft code drawn up by funders Susan Dunn of Harbour Litigation Funding, Christian Stuerwald of Allianz and Wayne Attrill of IMF.

Delegates came out in favour of self-regulation but with strong incentives to make funders sign up.

The code is to be policed by a new industry association. Its purpose is to facilitate the development of a competitive and responsible litigation funding market.

CJC chief executive Robert Musgrove said: ‘Considerable progress has been made toward developing a code of conduct for third-party funders.

‘The initial draft will be refined over the summer to take into account stakeholders’ views, and further advice from established regulators will be sought.’

He added: ‘The CJC both recognises and welcomes the desire of funders to establish effective light-touch regulation at the start of this emerging industry.’