“Introduction of Consumer Rights Act opens door to litigation abuse in UK”, say campaigners

01st Oct 2015

Today marks the introduction of the Consumer Rights Act (CRA), which was passed in Parliament under the coalition government in March 2015 and allows for “opt-out group actions”, replicating the class action system in the US. The introduction of this law is concerning, because it will likely lead to US-style lawsuit abuse and further undermine the public’s trust in the justice system, according to the Justice not Profit campaign.

The introduction of the CRA comes as recent research by BritainThinks, an independent polling firm, found that 56% of the public believes the civil litigation system is becoming “increasingly Americanised” and only 21% believes the system is “moving in the right direction”.

The Justice not Profit campaign, which campaigns against lawsuit abuse in the UK, is concerned that a number of changes made under the coalition government will lead to an unprecedented proliferation of frivolous litigation – putting both taxpayers and consumers at risk.

Recent research by the campaign shows that hedge funds and other investors are increasingly investing in lucrative legal cases with potentially large pay-outs. Campaigners fear that the CRA will create a pay-out bonanza for investors – also known as Third Party Litigation Funders – on the lookout for new litigation opportunities. The third party litigation funding industry currently operates without government regulation.

Scévole de Cazotte, Vice President of International Initiatives, U.S. Chamber Institute for Legal Reform said: “Today the Consumer Rights Act became effective, which among other features introduces US-style class actions for the first time in the UK. We fear, unfortunately, that this date will mark the beginning of a new and worrisome trend in excessive litigation, particularly if unregulated and for-profit third party litigation funders are free to generate these actions. Plaintiffs’ lawyers and litigation funders are without a doubt rejoicing over this new law which will mostly benefit their bottom-lines rather than British consumers.”

ENDS

 

Read Justice not Profit’s analysis of the litigation funding market here and more on polling of the British public here.