The Morrison Government is committed to ensuring that all class action members have access to justice and that class action law firms and litigation funders always act in the interests of those members.
The Government will consult on the recommendations of the Parliamentary Joint Committee on Corporations and Financial Services Report Litigation funding and the regulation of the class action industry, handed down on 21 December 2020.
The PJC Report contained 31 recommendations and highlighted the growth of litigation funding, the participation of international players in the Australian market and the frequency of abnormally high profits for class action law firms and litigation funders. The Committee found that current regulatory arrangements are inadequate and greater oversight of the industry is required in order to ensure fair and reasonable outcomes for all class members.
The Government has already acted on Recommendation 29 of the Committee’s report by introducing legislation to implement permanent changes to Australia’s continuous disclosure rules. These changes more closely align Australia’s continuous disclosure regime with the approach taken in both the United States and the United Kingdom.
The Treasurer and the Attorney-General will consult on the remaining recommendations of the PJC Report that can be implemented by the Australian Government, in particular Recommendation 20 which proposes the introduction of a guaranteed minimum rate of return for class action members.
This measure is of particular importance to ensure successful applicants are adequately compensated in their cases as well as preventing litigation funders and law firms from taking disproportionate fees in the process.
Consultation on a guaranteed rate of return will be conducted by Treasury and the Attorney-General’s Department ahead of the Government finalising a response in 2021.