AICD supports regulation of litigation funders

The Australian Institute of Company Directors (AICD) reiterates its support for the Federal Government’s regulation of litigation funders under the Corporations Act, which came into effect for new class actions this month.

The Australian Institute of Company Directors (AICD) reiterates its support for the Federal Government’s regulation of litigation funders under the Corporations Act, which came into effect for new class actions this month.

It comes as a motion to disallow litigation funding regulations is due to be considered by the Senate next week.

The AICD has written to crossbench Senators to express our support for the recent changes which allow for greater regulatory oversight by requiring funders to hold an Australian Financial Services Licence (AFSL) and comply with the managed investment scheme regime.

AICD CEO and Managing Director, Angus Armour, said, “The AICD has long called for more robust regulation of litigation funders to improve the transparency of their operations.

“Litigation funding is a commercial business model and so it is entirely reasonable to expect that it be subject to an appropriate degree of external oversight. The near complete absence of regulation has been a gaping hole in our frameworks to date.

“The regulations do not prevent class actions, backed by funders, from being brought. Instead they will establish improved safeguards and standards for this growing industry.

“The AICD believes the regulation of litigation funders is a good first step in addressing the concerns about Australia’s securities class action industry. These regulations will help address the very real risk that funders will act in their own commercial interests rather than those of class members seeking access to justice.”

Media Contact: Maegen Sykes 0439 167 567