The Australian Law Reform Commission has been asked by the Attorney General, Senator the Hon George Brandis QC, to inquire into class action proceedings and third party litigation funding, particularly in regards to whether there is adequate regulation of costs charged, conflicts of interests and the capital adequacy of funders.
Despite the central role third party litigation funders are playing in class action proceedings, they are currently not bound by a professional ethical code or a comprehensive regulatory framework.
While court supervision of proceedings has mitigated some of the risks associated with funded class actions, the current system of oversight is inadequate. The AICD has previously called for a national licensing regime.
AICD Managing Director & CEO Angus Armour said that given the role of litigation funders in enabling and directing civil litigation, it is essential that appropriate checks and balances are in place in order to safeguard the interests of plaintiffs and class members.
“Currently there is an absence of meaningful regulation of litigation funders, which is not in the best interest of the community or the economy,” he said.
“This leaves potential group members exposed to unjustifiable costs, unfair risks and the effects of conflicts of interest.
“It is essential that appropriate checks and balances are in place in order to safeguard the integrity of our justice system.
“Greater regulation of litigation funders is a longstanding recommendation from the Productivity Commission so its welcome to see this important issue finally back on the agenda.”
AICD Media Contact: Carissa Simons 02 8248 6612 | 0417 348 659
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