Inquiry into the regulation of the class actions regime

The AICD strongly believes that Australia’s securities class action market requires reform. The current regime is leading to adverse outcomes for Australian businesses and shareholders and is out of step with other jurisdictions, leading to a growing market for litigation funders to bring securities class actions that are motivated by profit over the public interest.

The AICD supports robust market disclosure and believes that regulatory settings should support and encourage entities to provide information to investors, including forward-looking statements. We also recognise the critical role that class actions play in facilitating access to justice in other areas of the law, such as product liability and environment cases.

With this in mind, we recommended that the Committee consider:

• Exclusive public enforcement of continuous disclosure and misleading and deceptive conduct laws;
• Reforming the continuous disclosure and misleading and deceptive conduct laws to require an element of fault or intent, in line with comparable jurisdictions including the United States and United Kingdom; and
• Improving the procedural framework to reduce the burden on plaintiffs, courts and businesses caused by competing class actions and unmeritorious claims.

We also strongly supported the Government’s recent announcement that litigation funders will be required to obtain an Australian Financial Services Licence (AFSL) and comply with the managed investment scheme regulatory regime.

Finally, we continued to oppose the introduction of contingency fees given the significant conflict of interests created by them.