The UK government has announced plans to examine whether to introduce a new consumer class actions regime in England and Wales.
If introduced, the new regime would expand the scope for opt-out class actions, which can currently only be heard for competition claims in the Competition Appeals Tribunal (CAT).
The Law Commission, backed by the Department for Business and Trade (DBT), will consider the advantages and disadvantages of a distinct consumer class action regime, alongside questions of ‘effective enforcement’ in opt-out consumer law.
Key objectives of the project as laid out by the Law Commission include ‘Improving consumers’ access to redress, both by securing redress in court and by ensuring that damages are distributed to the affected class,’ as well as ‘Promoting the efficient conduct of litigation and proportionate cost.’
The project is set to begin in autumn 2026, with stakeholder engagement forming part of an initial scoping phase ahead of a formal consultation.
Freshfields London dispute resolution practice head Andrew Austin was sceptical: ‘It’s early in this process and we’re likely some way away from any concrete proposals for change,’ he said. ‘But it’s not clear what the case is for reform: what is the evidence that consumers aren’t currently getting access to justice in consumer law cases?’
He also pointed to the extension of the Competition and Markets Authority’s (CMA) consumer protection powers under the Digital Markets, Competition and Consumers Act 2024, adding: ‘In his recent letter that announced this review, the Business Secretary acknowledged that consumers already have “strong protections against exploitative behaviours”, and he emphasised the CMA’s new powers to investigate consumer detriment.’
‘The Law Commission will be able to take into account learnings from the last ten years of the competition consumer regime’
On the other hand, Hausfeld senior partner Anthony Maton welcomed the news, saying: ‘We have long advocated the widening of the competition collective regime to other areas where at present consumers cannot access justice to achieve restitution, so very much welcome the decision of the DBT to ask the Law Commission to look at consumer collectives.’
Under the terms of reference, the Law Commission will also consider the government’s conclusions in an ongoing review of the current opt-out collective proceedings regime in the CAT, in particular its assessment of whether certain sectors are ‘disproportionally targeted’ by litigants and ‘the effectiveness of distribution of damages.’
Questioning the objectivity of this framing, Maton said he was ‘slightly baffled that it is announced before the DBT’s own publication around collective redress which we have been told is imminent.
‘It is somewhat odd that the Terms of Reference seem to pre-judge the conclusions of the current DBT review into the competition regime in talking about “targeting” of defendants, the “exploitation” of actions, “evidence of pent up demand” and the questions only focus on opt out,’ he continued.
Kate Vernon, head of competition litigation at Quinn Emanuel‘s London office, expressed faith in the review process: ‘The work that the Law Commission is proposing will be able to take into account the learnings from the last ten years of the competition consumer regime and look at how Government can design a system that is effective and recognises the different roles that defendants, funders, lawyers and consumer bodies can, and will need to, play in making any new consumer redress system work.’
If it finds that such a regime would be beneficial, the Law Commission will set out proposals for the regime’s design, including how claims are defined, certification criteria and mechanisms for funding, costs and damages. It will also consider whether the proposed regime should allow for ‘opt-in’ as well as ‘opt-out’ claims.
‘It’s an early step with a long road ahead, and its importance should not be overstated’
Clifford Chance London litigation partner Maxine Mossman noted that the project forms part of a broader shift in collective litigation policy: ‘The Law Commission’s renewed focus on collective consumer redress forms part of a wider reassessment within the legal sector regarding how group claims are litigated in England and Wales,’ she told LB.
She also noted unresolved questions around the 2023 PACCAR ruling’s restrictions on percentages-based funding agreements: ‘The impact of the existing opt‑out regime for breaches of competition law is currently under review, and the position on litigation funding remains uncertain following PACCAR, notwithstanding the Government’s commitment to legislate on the issue. While the consultation is framed as an initial scoping exercise, the implications could be far‑reaching.’
Slaughter and May consumer protection head Tim Blanchard also highlighted the need to place the announcement in the context of wider developments, citing ‘the DBT’s call for evidence on the CAT’s opt-out collective proceedings regime’ and ‘the CMA’s willingness to order redress in its own enforcement cases.’
‘It is an early step though (with a long road ahead), and its importance should not be overstated,’ he added.
For Hogan Lovells litigation partner Matthew Felwick, the project was not unexpected given increasing pressure for opt-out style mechanisms: ‘Over the years the calls for an opt-out procedure have been increasing. A generic class action was rejected in favour of a sectoral approach, leading to the introduction of the CAT class action regime for competition claims. Since then, pressure has continued to mount.’
However, he was wary of the outcome of defining a ‘consumer law claim’ in the proposed regime: ‘Even if a narrow definition of consumer law is ultimately recommended, many sectors and businesses would be facing increased litigation risk. The review should be monitored closely and consideration given to responding to the scoping questionnaire or the consultation that will follow, either directly or through an industry association.’
The issue of certification has also troubled the CAT, with critics arguing that the regime has not been sufficiently tightly circumscribed. Last year, the Tribunal dismissed three parallel class actions against train operating companies alleging abuse of dominance on the grounds that they were consumer claims, not competition.
‘The risk of introducing new collective action mechanisms is that they can lead to speculative litigation and impose unnecessary costs on businesses’
Another central criticism of the CAT has been the potential for enormous commercial benefits to lawyers and funders in comparison to the returns meted out to class members following large fees. Last week, the CAT refused to certify an opt-out £382m class action claim brought by Simmons & Simmons against salmon price fixing by a group of producers on these grounds.
In its judgment, it stated that such returns can ‘distort the incentive to pursue such proceedings. This distortion arises in part because many class actions are initiated by legal teams and not by the class itself.’
Freshfields’ Austin sounded a warning note that a new opt-out regime would see these issues recur: ‘The risk of introducing new collective action mechanisms – particularly on an opt-out basis – is that they can lead to speculative litigation and impose unnecessary costs on business. I’m sure this – and the procedural safeguards that would need to apply in terms of e.g. a rigorous class certification stage, transparency around litigation funding and full protection of defendants’ rights – will be front of mind for the Law Commission.’
Funders, however, have long argued that their businesses play a crucial role in securing access to justice. And many have welcomed news of the review.
Neil Purslow, chairman of the executive committee of the International Legal Finance Association, was positive: ‘It is encouraging to see the Government tasking the Law Commission to examine ways of expanding consumer redress. Consumers and small businesses too often lack a realistic route to hold corporate wrongdoers accountable.’
Jeremy Marshall, chief investment officer at Winward Litigation Finance said: ‘For it to work in practice, it is vital that the Government recognises and protects the role of litigation funding, without which these claims can’t be brought. Funding turns legal rights into real-world outcomes, providing justice for consumers and deterring bad corporate behaviour. They should have a good look at how funders and consumer groups have worked collaboratively in Australia.’
