Government abandons UK class action hopes
April 14 2010, 10:03 amShareholder rights and scheme governance will suffer from the government’s decision to not allow class actions for financial institutions.
Outspoken corporate governance advocate Lord Paul Myners’ decision to omit the relevant clauses from the financial services bill during the ‘wash-up’ period, in which bills are rushed through in time for the next parliament, has angered lawyers and other legal service providers.
But Goal Group managing director Stephen Everard complained the decision has hampered attempts to encourage corporate management to behave responsibly.
“The main goals of the class actions mechanism are improving corporate governance and strengthening shareholder rights,” he said. “It is therefore disappointing the proposed amendments to the financial services bill will be dropped, as there evidently is a need for class actions to be included.”
A recent report from the Civil Justice Council recognised there was an “unmet need” for better compensation for potential financial services litigants.
Everard added: “There are several successful and fair class action models around the globe on which [a UK version] could be based.”
Patrick Daniels, class action specialist for Robbins, Geller, Rudman and Dowd, agreed, but believes class action in the UK could still be forthcoming.
He cited the government’s recent involvement with the US Supreme Court in the National Bank of Australia case, which involved the rights of British and other foreign investors to participate in US class actions involving non-US corporates.
He said: “The government urged the Supreme Court to severely limit the rights of foreign investors to do so, explaining the UK courts provided ample protections and rights for defrauded investors to pursue claims.
“In filing the brief, the government all but invited investors to pursue these cases in English courts. I have no doubt you will see more actions brought in Britain.”
