The UK government’s decision to review the opt-out collective actions regime under the Consumer Rights Act has raised plenty of eyebrows among claimant and defendant lawyers.
At a time when the Competition Appeal Tribunal (CAT) regime is still in its infancy and the system is only just beginning to establish a robust body of law, this move appears both unexpected and, to some, unnecessary.
As Antony Maton of Hausfeld noted, the review itself dropped quietly and without notice on 6 August.
Initiated by the Department for Business and Trade, it seems to reflect the Labour government’s pro-business agenda, raising questions about whether the process unduly harms business. This is a stance that demands scrutiny.
As Maton says, only one case has been entirely through the CAT system (Le Patourel), while the three settlements concluded to date are not yet through distribution and related issues. The CAT and appellate courts have been and are very actively refining the regime as cases advance.
One class representative, Justin Gutmann, called the review “extraordinarily naive, inappropriate at this time – 2030 might be right – badly written and politically motivated”.
Let me be clear: this system of law is only about a decade old. The opt-out system, introduced by the Consumer Rights Act 2015, was a landmark shift that allowed consumers to seek collective redress in cases of widespread corporate wrongdoing following regulatory findings.
However, as former Law Society president David Greene, who jointly leads the pro-claimant Collective Redress Lawyers Association (CORLA) and is senior partner at Edwin Coe, said: “The opt-out regime under the Consumer Rights Act is relatively young and, like all fresh process regimes, is taking time to bed in.
“The regime is not perfect, but it seems to be too early to be reviewing it from a business perspective as the Competition Appeal Tribunal and the Court of Appeal are working their way through the process and a body of law is developing.”
Greene’s observation is astute. In less than 10 years, the opt-out mechanism has shifted from a slow beginning to gradually expanding areas of practice, with legal boundaries still being shaped through ongoing litigation. It is, as Greene points out, “taking time to bed in” – and that is to be expected for any significant legal innovation.
The review’s framing is revealing. Greene added: “The flavour of the invitation from the department suggests that it questions the business case for the opt-out process, but it remains at its base a procedural option that allows consumers access to justice, which should be measured not just by the result of the tribunal process but also the changes in corporate behaviour that eventuate.”
This is key. Collective actions not only secure financial redress for consumers but also deter bad corporate behaviour and balance power between consumers and big businesses. Examples include the Post Office scandal, Vodafone franchisee litigation and the Merricks v Mastercard case.
Concerns that the opt-out regime represents some kind of speculative bonanza for lawyers and funders are, according to Greene, misplaced. “Neither lawyers nor funders seek to run ‘speculative’ cases; even if they did, they would be sifted out at the certification stage,” he said.
As, indeed, they have.
The core issue is corporate wrongdoing, which is likely to have already been recognised by regulators and rarely by businesses. There is, I think, room for evolution rather than revolution.
The CAT could certainly benefit from greater funding, more judges and better physical and financial resources – but so could all the courts, something which the government should focus on much more than it has done.
Greene, in his capacity as committee member and past president of the London Solicitors Litigation Association (LSLA), said: “It isn’t difficult to identify teething problems with the CAT regime, but it has been interesting to watch the common law doing its job and resolving some of these along the way.”
This is, after all, how legal systems mature. To intervene at this stage, when the system is still evolving, risks stifling the natural development of case law and preventing the regime from reaching its full potential. The CAT's new president, Mrs Justice Kelyn Bacon, has been in office for less than a year.
The future presence of costs lawyers in assisting the tribunal, which has been welcomed by the LSLA, will also be positive in ensuring costs are controlled. Furthermore, questions around funding in the aftermath of the Supreme Court's 2023 PACCAR ruling, which rendered many litigation funding agreements unenforceable by classifying them as damages-based agreements, are being resolved sensibly by the appellate courts.
One of the most contentious issues is third-party funding, which, as Greene observes, “is essential to the running of such cases”. The close relationship between collective actions and litigation funding is again under the microscope. We have been here before. The Civil Justice Council review comprehensively assessed the industry. Its conclusions were met with broad agreement (as much as they ever can be).
We now have another review that arguably undermines the CJC’s detailed work, driven by the Labour government’s pro-business stance, pitting one government department against the judiciary. This is not good policy.
Greene points out: “Like all innovations, the market in opt-out process has not entirely met the authors’ expectations. Instead of many cases following regulatory decisions, the vast majority have been ‘stand-alone’ actions, in which claimants must prove a breach of competition law, often predicting rather than following regulatory decisions.”
While the new process is relatively young, having been in effect for less than 10 years, and has had a slow start, its popularity is building and generating a growing body of law.
While Greene and others advocate for the ongoing development of the opt-out regime, it is essential to recognise opposing views. White & Case partner Charles Balmain, representing a business-focused perspective, told me of his concerns that the current trajectory of collective actions may be outpacing regulatory frameworks and could undermine business innovation and competitiveness.
Critics like Balmain argue that the proliferation of stand-alone actions risks encouraging litigation for its own sake, potentially imposing undue burdens on businesses that are forced to defend extravagant claims. In short, the opposite of fair civil justice.
He told me: “What was intended as a mechanism to compensate victims of anti-competitive conduct has itself become a business opportunity, with class representatives frequently advancing novel stand-alone case theories resembling environmental, consumer or data law claims rather than the traditional field of antitrust.”
The government’s review of the opt-out collective actions regime may be well-intentioned, but it risks undermining a process beginning to fulfil its promise for UK consumers. Greene’s comments – both for CORLA and the LSLA – stress the need for patience, thereby allowing the system to develop and the courts to shape the law as cases are resolved.
While business concerns must be taken seriously, the core aim of any collective redress mechanism must remain access to justice for consumers.
As the review unfolds, policymakers would do well to heed the lessons of legal history: innovation in justice is often slow, but ultimately, it is the persistent evolution of the law that best serves the public good. Such evolution must also be adequately funded. Give the CAT a chance.
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