More rights for the consumer in move over ‘class actions’

CONSUMERS who have suffered because of anti-competitive practices will find it easier to gain justice under Government plans to introduce a new regime for ‘class actions’, according to the Law Society.

The planned changes will see the introduction of ‘opt-out’ collective actions, which means a legal action can be brought on behalf of all affected individuals, such as a consumer body in relation to price fixing scandals.

According to the Law Society, collective actions can help individuals who would not have been able to afford the legal fees on their own.

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The new regime will replace the existing ‘opt-in’ rule, whereby a body bringing a class action case has to get all affected individuals or consumers to join the action.

The change will benefit consumers, who, in future, will need to actively ‘opt out’ if they want to bring their own, separate case against a defendant. But this will also make the cases easier to bring for organisations like consumer bodies.

Law Society President Lucy Scott-Moncrieff said the Government’s position was very close to the Law Society’s on most issues.

Adam Aldred, a Leeds-based partner at Addleshaw Goddard, said yesterday: “This is a brand new experiment as far as the UK Government is concerned.

“It is confined to competition cases, but it may be extended, depending on future governments. It will be good news for consumers and should lead to them being paid compensation for their losses more often.

“It may lead to increased litigation. It will definitely lead to the threat of increased litigation and, hopefully, result in more settlements.”

Paul Burkinshaw, a partner in Leeds-based Clarion’s dispute resolution and litigation team, added: “The decision is not something which has drawn a favourable response from the CBI, which sees this as the adoption of US-style collective actions and which it believes will do nothing other than fuel a litigation culture in the UK.

“Actions are, however, limited to those brought in the Competition Tribunal.

“As a result, it is thought likely that there will only be a small number of matters to which the rules are immediately applicable.

“That said, one cannot know how claims companies will seek to use the rules in order to bring multiple actions.

“Consumer groups view matters rather differently, seeing this as a method of deterring the activities of dodgy or dishonest firms. Only time will tell whether this is indeed the spring board for a new generation of claims.”

James Teagle, an associate solicitor in the commercial dispute resolution team at Blacks, questioned whether the reforms would really help consumers.

He said: “The underlying rationale for the reforms, introduced by the Department for Business, Innovation & Skills, is ostensibly to promote fairness and growth of small businesses.

“However, some commentators – including me – see this as an obvious attempt by the Government to reduce the drain on the public purse, with the likely consequence that individuals with genuine and unique claims risk being left out of pocket.”