This week, the media reported that the Legal Services Board has come out in favour of regulation of third-party litigation funding in consumer claims.
According to reports, LSB director of regulation and policy Richard Orpin said that the Financial Conduct Authority should provide regulatory oversight of the sector when financing consumer claims.
Orpin was speaking at a Civil Justice Council event earlier in the week, and his comments are worth paying close attention to:
“We’re concerned about poor standards of client care, conduct that puts short-term financial gain above the client’s interests and duty to the court, and other evidence of poor practice by law firms in receipt of such funding, such as… failure to advise clients of their potential liability. We’re also concerned about poor practice by some – admittedly, not all – litigation funders, such as exerting undue control over the litigation process, attempting to obtain excessively high returns, or failing to [meet] capital adequacy requirements, particularly where funders make… risky investments.”
Fair Civil Justice has long argued that ‘self-regulation’ has been proven not to work, and we are encouraged to see the Legal Services Board come out and advocate for stronger oversight of the sector.
We strongly agree with those concerns raised by Orpin, and our publication last year [Establishing Fairness in Litigation Funding] laid bare the problems that exist within the current system and the risks that consumers were being exposed to as a consequence.
While we agree in principle with the LSB’s calls for stronger oversight, Fair Civil Justice has not yet adopted a formal position on who the appropriate body would be to fulfil that function. We will be submitting our evidence to the Civil Justice Council as part of its review into third-party litigation funding, where we will be considering this question as part of a much broader view of the sector.
