Scotland is considering changing the rules governing group proceedings – automatically including huge numbers of people in legal action unless they specifically chose to opt-out. The forthcoming conference (link here) convened by CMS Scotland, CBI Scotland, the Fraser of Allander Institute and the David Hume Institute will shine a light on the issue, and I look forward to being a part of that discussion.
The debate is often focussed on the business risk. However, another important question to consider is whether the Scottish court system can actually provide meaningful redress for Scottish consumers?
The numbers speak for themselves. Across the UK class actions involving more than 655 million class members have been brought in the UK for competition class actions alone, with most growth in just the last three years. This translates to more than 10.4 actions for each UK resident.
Evidence internationally suggests that there will be an exponential rise in the number of speculative claims, funded by unregulated hedge funds, and financial redress for consumers will be hard to identify.
Scotland risks accepting the Americanisation of our court system without delivering what it is intended to.
The real opportunity lies elsewhere. We already have successful Ombudsman schemes, compensation schemes and alternative dispute resolution systems in place providing redress to millions of consumers every day. The rail industry’s Delay Repay scheme alone paid out £138.6 million to passengers in the year to March 2024 – delivering direct compensation without going to court.
Rather than introducing a radical class action system, Scotland should be asking how we can and should strengthen the entire consumer redress system. This means exploring opportunities to:
- Regulate litigation funders
- Put the consumer at the centre of the process, rather than the lawyers and litigation funders
- Introduce further ombudsman services
- Prioritise redress outside of the court system
If the proposal to allow opt out mass litigation comes before the Scottish Parliament, most probably as secondary legislation, then MSPs should demand a full debate. Not just about court procedure but about what genuinely works for consumers and how litigation can form a part of that.
