Government submitting to big business over class action funding

In a statement, Slater and Gordon head of class actions and Class Actions Australia spokesman Ben Hardwick said recently announced regulations that regulate class action funders as managed investment schemes may have been driven by discussions between the government and US business lobbyists.

“I don’t know what Mr Frydenberg’s discussed in his private meeting with the US Chamber of Commerce, but if you were an American multinational worried about Australian class actions this is exactly the kind of reform you would want to see,” Mr Hardwick said.

“Class actions are obviously not ‘investment schemes’. To suddenly define them as such makes zero sense unless your motive is to stymie class actions.”

Mr Hardwick said ASIC had been equally confused by news that litigation funders were to come under the financial services licensing regime, having told a parliamentary inquiry earlier this month that they had not been consulted around the changes.

“A class action is a method through which ordinary Australians can seek justice when they’ve been hurt by a corporation. To suggest class action members are banding together in an investment scheme is insulting and incorrect. They are victims, not investors,” Mr Hardwick said.

“Regulating a group of class action members as participants in an investment scheme will create all sorts of requirements that are suitable for investors, but ridiculous to require of victims.”

Mr Hardwick said the outcome of the changes would be to make it harder for victims of financial services misconduct to raise funds for class actions against major institutions.

“It will mean corporations face fewer consequences for bad behaviour, making them more likely to try and get away with wrongdoing,” he said.

“I suspect Mr Frydenberg knows what he has done is not in the interests of ordinary Australians. His hope is that it’s all so complicated that in the midst of a pandemic no one will notice.”