The regulation of litigation funding remains a hot topic in Australia. In 2020 significant reform occurred with the Corporations Amendment (Litigation Funding) Regulations 2020 (Cth) (Regulation). The Regulation required litigation funders to hold an Australian Financial Services Licence and be registered as a managed investment scheme for any class action. It also subjected litigation funders to regulatory oversight by ASIC.
In October 2021, the Australian government proposed further reforms. The Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021 (Bill), seeks to address recommendations made by the Parliamentary Joint Committee on Corporations and Financial Services on litigation funding and the regulation of class actions. The Federal Government claims the reforms are aimed at providing greater transparency and protection to group members in class actions. On 3 February 2022, the Federal Government Senate Economics Committee endorsed the Bill.
This article is the first part of a litigation funding series. The series will review, assess and comment on the Bill, the proposed reforms, significant developments and the potential consequences and benefits of the reform from various perspectives including in external administrations.