Class actions encompassing more than 540 million class members have been brought in the UK, with most of the growth in just the last three years. This translates to more than 8.1 actions for each person in the UK. In Scotland, if the Scottish Civil Justice Council (SCJC) makes changes to current legislation, this figure could spiral upwards.
The SCJC has launched a consultation on group proceedings, asking whether Scotland should make possible a system of “opt-out” group proceedings, with potentially huge numbers of people deemed to be part of a claim, unless they specifically opt-out of doing so.
The outcome of this consultation is likely to have a significant impact on Scottish businesses, consumers, and the Scottish economy. Evidence internationally suggests that there will be an exponential rise in the number of speculative claims, funded by unregulated speculators, and financial redress for consumers will be hard to identify.
Despite this worrying prospect, very few people outside of legal circles have been made aware.
At first glance, the subject matter sounds progressive. However, when you dive a little deeper, the complexities become more apparent.
The consultation effectively presents Scotland with a choice, and Scotland needs to decide. Should it build a fairer, more transparent system? Or should it invoke an Americanisation of the Scottish legal system, undermine confidence in civil justice across the country, and add increased pressure on our already overburdened court system?
It has been widely reported, including most recently by Channel 4 News, that there are many risks facing consumers in the current litigation landscape.
Just one example is the thousands of homeowners caught up in the cavity wall insulation scandal who were promised a ‘no win, no fee’ legal representation, only to find themselves saddled with legal bills they couldn’t afford because their claim was unsuccessful.
The funding of class actions is unregulated, leaving consumers exposed. Expanding the regime to invoke even more actions – most likely on behalf of individuals who don’t even know they are part of a claim – would open the floodgates to unscrupulous, unregulated funders viewing Scotland as open for business.
Such a move jeopardises consumer protections and puts Scottish businesses who could be subject to speculative claims at risk. Naturally, this would place pressure on key sectors of the Scottish economy, including food and drink manufacturing, life sciences, digital technology, and financial services.
Pitfalls of the current regime
Since the introduction of class actions in Scotland, the system has seen many significant challenges. The lack of statutory safeguards for claimants and the lack of regulation of third-party litigation funders has resulted in a system that significantly rewards funders while failing to provide fair redress or protection, for consumers.
The Boundary Fares Collection Action demonstrates this risk. In 2024, Stagecoach settled claims that it had overcharged London commuters for “cross-boundary fares”, agreeing to pay £25m. Despite widespread publicity, only £216,000 was successfully claimed by passengers, leaving almost £10m unclaimed. Much of the remainder now risks being absorbed by lawyers’ and funders’ costs, with class representative Justin Gutmann applying to recover up to £10.2m in fees.
This raises the legitimate question of why the SCJC would consider an opt-out regime when the current framework is not delivering the fairness and accountability it was established for.
Real rationale for consumer redress
There are many other opportunities for consumer redress, outside of the court system.
There are effective redress systems across the UK that are delivering for consumers on a day-to-day basis – beyond what can be achieved in court. For example, the frequently used Delay Repay system for train operators paid out a total of £138.6 million in the year to March 2024.
Instead of a head-long rush towards an opt-out system which will threaten the economy, enrich unregulated third-party funders and, crucially, fail consumers, we have an important opportunity in Scotland to strengthen safeguards, improve transparency, and promote effective alternatives to the court system.
Have Your Say
The SCJC consultation on group proceedings is open until 23 January 2026. Your insights will really help to shape this outcome and to ensure Scotland’s best interests.
I appreciate that responding to the consultation can be quite a challenge. Please visit www.fairciviljustice.org or email [email protected], and we can provide further guidance on the consultation, how to get involved, and information to help shape your response.
