Financial services class actions up 69%

Allens’ Class action risk 2024 report uncovered that 22 per cent of all class actions filed last year were related to the banking and financial services sector – an increase from 13 per cent in 2022.

Claims in the financial services sector were mainly related to super funds, conduct in selling complex financial products, shareholder class actions, and data breaches.

“After a brief reprieve in recent years, the banking and financial services sector was the second biggest target for class action filings in 2023,” the report noted.

“However, for the second year in a row, there were no class actions filed against the major banks in 2023 (although one case was filed against a subsidiary on behalf of superannuation members).”

Two of the biggest class actions covered by ifa last year include the AMP BOLR class action and the Dixon Advisory case.

Allens predicted, however, that despite the number of filings in 2023, there is a possibility that class action risk may be subsiding particularly given the absence of clear trends in the 2023 filings, as well as the fact that the record filings in 2018–21 were largely driven by claims against the banks and other financial services companies in the immediate aftermath of the Financial Services Royal Commission.

Looking ahead, the firm pinpointed cryptocurrency and ESG matters as two key areas which could become more prevalent in future class actions.

“The continued regulatory focus on greenwashing and bluewashing, and the proposed introduction of mandatory climate and modern slavery reporting requirements, are likely to serve as the catalyst for future class action risk,” the firm wrote.

Cryptocurrency and digital assets also “looms large on the horizon” as an emerging area of risk for potential class actions.

“While we have seen only one crypto-based class action in Australia (which is still making its way through the courts), growth in claims involving digital asset platforms loom large on the horizon as an emerging area of risk,” Allens said.

“At present, the position of most digital asset platforms is that cryptocurrency is a not a financial product and that issuers do not provide a financial service. However, with a proposed regulatory framework for digital asset platforms in the pipeline and ASIC challenging the positions of crypto issuers in the courts, it may be only a matter of time until there are developments in the legal landscape that provide ammunition to plaintiff law firms assessing the viability of these claims.”