GUEST POST – Some class action in Queen’s Speech

We are inviting a series of guest posts to mark the official launch of the Young Fabian blog. YF members who would like to contribute should get in touch with Vice Chair, Adrian Prandle, aprandle@youngfabians.org.uk.

Next up is Jon de Beer, Young Fabian member, delving beneath the headlines for highlights in the Queen’s Speech.

The Prime Minister’s announcement of a Financial Services Bill in the Queen’s Speech should be welcomed and is a bold move in the face of a City that is getting back to business as usual. I’m sure that Fleet Street will focus on a supposed end to the banking ‘Bonus Culture’ or curbing irresponsible credit card lending, but what really struck me was this from Mr Brown,

“…this also means empowering consumers to hold banks to account by taking collective action to get redress when many people feel that they have been badly treated.”

I am intrigued into what this might actually mean. Are we in for US style class actions where a collection of stakeholders can bring a joint lawsuit against a company? These class actions allow for many synergies in terms of lower defence costs, access to higher calibre lawyers and the lack of need for multiple case re-trials. Their ultimate benefit however is that of holding companies and their management to account as the barrier of standing alone against a large corporation is removed.

It will be interesting to see how the Government will implement this. In the US a class action is a relatively risk free enterprise as it is unusual in the case of a loss to pay the other sides costs. However this is not the case in English law as anyone who has been on the losing side of a libel case will tell you. One option could be to force the bank to pay for the litigation itself. This option would be fair, providing the number of stakeholders needed to bring a class action wasn’t set too low, and in the case of shareholder class actions, the company’s capital is mostly their money anyway.

As always we will have to wait for the policy details, but what is glaringly apparent is that the Financial Services Bill wants to create a ‘stronger, fairer Britain’ and I’m sure we are all in collective agreement that the Conservatives will be against it.