Parliament will be given the chance to bring forward regulation of litigation funding as reform supporters continue to bang the drum for change.

Liberal Democrat peer Baroness Bowles of Berkhamsted this week proposed an amendment to the Financial Services and Markets Bill which is being debated in the House of Lords.

The amendment is narrow, proposing to require the Treasury to assess within six months of the legislation being passed whether litigation funding should be regulated by the Financial Conduct Authority.

In consultation with the FCA and the lord chancellor, the Treasury would have to publish a report setting out a timetable for bringing funding activities under the scope of the regulation.

An amendment to an existing bill, which may or may not be debated in parliament, is by no means a definite signal that litigation funding will be regulated anytime soon.

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But there continue to be discussions about how it could be achieved and who would regulate it, giving campaigners renewed hope that reform is possible.

Seema Kennedy OBE, executive director of lobby group Fair Civil Justice, in case you decide the cover the amendment: ‘Baroness Bowles’s amendment is a sensible and proportionate step towards closing a clear regulatory gap. Litigation funders can deploy significant capital into high-volume consumer claims while sitting outside the direct financial oversight applied to other actors in the claims ecosystem.

‘With the FCA itself raising concerns about complex funding structures, financial resilience and conflicts of interest, parliament should now ensure that the financial side of this market is subject to proper scrutiny.’

Last week, justice minister Lord Lemos said the government planned to introduce ‘proportionate regulation’ of litigation funding agreements ‘when parliamentary time allows’.

He was reminded by Lord Arbuthnot of Edrom, who during his time as an MP was crucial to uncovering the Post Office scandal, that without litigation funding, Sir Alan Bates would not have been able to bring a group action against the Post Office on behalf of wrongly convicted sub-postmasters.

Lord Lemos said: ‘We agree with Sir Alan that third-party funding is crucial for enabling ordinary people to access justice. The access to justice point is the centre of why we think this is important, and I know that is what noble lords feel too. With group and consumer claims, third-party funding under a litigation funding agreement is often the only option people have to bring a claim.’

He added that ‘light touch’ regulation was important and that consumers needed transparency in these situations.