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Regulation, Social Issues, Economics

Prediction: UK government evaluation of class action and litigation funding will seek to balance consumer justice and business impact

Regulation, Social Issues, Economics
D&O and Financial Institutions
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The effectiveness of the UK's opt-out class action regime in the Competition Appeals Tribunal (CAT) is under the spotlight. A decade on from the introduction of the opt-out collective actions regime in competition law, the government has launched a review of its operation. Concerns exist that consumers are not obtaining meaningful redress and businesses are being disproportionately burdened. These have been heightened by the nine year legal battle in Merricks v Mastercard, which settled for just 2% of the pleaded claim value, and the CAT's dismissal of its first consumer trial (Le Patourel v BT Group PLC) which found that BT's pricing was not unfair or an abuse of dominance. The government is now exploring alternative dispute resolution and voluntary redress schemes to better balance consumer justice with business impact. This review comes swiftly after the Civil Justice Council (CJC) recommended in June 2025 that legislation be introduced swiftly to clarify litigation funding agreements  are not damages-based agreements, reversing the impact of the Supreme Court decision in PACCAR and the significant uncertainty created. The CJC also recommended the 'light-touch' regulation of the litigation funding market with enhanced regulation in consumer claims. The CJC proposals are likely to lead to continued growth of litigation funding in the UK and provide for a more stable, regulated environment in which funders have confidence in the enforceability of funding agreements.

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