Class inaction

The government’s response to collective redress has left reformers frustrated, says John Meltzer and Dan Armstrong

In 2008, the Civil Justice Council (CJC) claimed to have uncovered “overwhelming evidence” that the lack of an effective collective redress mechanism in England and Wales meant that legitimate grievances were left unresolved.

Last December, the CJC formally recommended that new legislation be enacted to make a comprehensive, opt-out form of collective action generally universally available to civil litigants. 

The government has now issued its response and, in short, it will not be encouraging for those lobbying for reform.

The response dismisses the evidence underlying the CJC’s recommendation, rejects outright the suggestion that a new collective redress mechanism should be made available to all civil litigants in England and Wales, and suggests that policy makers in each individual sector of the economy go back to the drawing board to consider whether a justice gap actually exists and whether a collective redress mechanism would provide a cost-effective and proportionate solution.

This potentially fragmented approach, combined with the Government’s clear preference for solving collective disputes via regulation, not litigation, suggests that those seeking wholesale reform of this area of the law at a national level have been dealt a significant blow. 

Indeed, it is far from clear that the government has any appetite for pursuing reform in this area at all.

Although it promises that a policy framework paper will be published to help individual government departments fully assess the current problem and propose solutions, there is no deadline set for publication and no timeframe set for future decision making.

At the very least, the Government’s call for further assessment to be undertaken simultaneously by a range of policy makers, potentially without any coordination, means that any reform could be a long time coming. 

This will be welcome news to business interests, as will the cautious note the government sounds about opt-out forms of collective redress and the clear preference it expresses for collective injuries to be remedied through regulation, not litigation.

These views dominated a recent government white paper on consumer protection, which similarly proposed remedying collective injuries primarily through the regulatory powers of a new Consumer Advocate office. 

Although much of the steam has been taken out of the CJC’s drive for wholesale change to the law regarding collective redress, one suspects that reform efforts might now focus on the consumer sector alone, since most of the examples of unresolved grievances identified in the CJC’s report involved injured consumers.

Equally, focus may turn to Brussels, where the European Commission continues to debate whether a European-wide form of collective redress should be introduced for competition and consumer law claims.

John Meltzer is a partner and Dan Armstrong an associate in the Class Actions Unit at Lovells