Law Commission to consider introduction of opt-out consumer class actions regime

The Law Commission has launched a new project to assess whether the way consumer laws are enforced could be strengthened through the introduction of a consumer class actions regime. The project will identify the associated benefits and risks and make recommendations as to the design of such a regime if it were to be introduced. 

Proposals to expand the current opt-out regime for competition claims in the Competition Appeal Tribunal to include consumer protection claims had been put forward during the passage of the Digital Markets, Competition and Consumer Act in 2024, but amendments to the draft legislation were ultimately unsuccessful. This project effectively revives the possibility of an opt-out regime for consumer claims.

The project's terms of reference set out various points for the Law Commission to consider, including: what should constitute a "consumer law claim"; the criteria and process for commencing a class action; and whether the regime should allow for "opt-in" as well as "opt-out" claims. 

The Law Commission will also consider the Government's conclusions in its review of the current opt-out regime for competition claims in the Competition Appeal Tribunal, which was launched last August, including in relation to: how funding methods can affect the functioning of the regime; the effectiveness of distribution of damages; evidence of pent-up demand for opt-out consumer protection claims; the role of certification; and how vulnerable opt-out collective proceedings are currently to being exploited and creating a litigation culture. 

Stakeholders are invited to complete an initial scoping questionnaire by 30 October. This asks for views as to the benefits and risks of an opt-out consumer class actions regime. It also asks what features should be included to improve access to redress, to promote the efficient conduct of litigation at proportionate cost, and (importantly) to ensure it does not promote speculative claims that are without merit. 

We will be submitting a response to the questionnaire. If any clients would like to discuss the project, please do get in touch.