Aifa has warned that the Financial Services Bill could prompt US-style class actions against advisers, opening the floodgates to unmerited claims from consumers and claim-chasers.
The bill is being finalised and it is feared legislation may be rushed through ahead of the general election.
Writing in this week’s Money Marketing, Aifa director general Chris Cummings says he is concerned about the bill’s provisions regarding collective proceedings.
He says, in its current form, the bill counts all consumers of a particular product or service as joining a claim unless they individually say they want to opt out.
Cummings says: “The bill would introduce, among other things, US-style class actions and potentially open the floodgates to unmeritorious claims against our member firms. In addition, proceedings could be brought by a ’representative’ with no other interest in the proceedings, allowing claim farmers to take actions in their own name and largely for their own benefit.”
CBI director of company affairs Matthew Fell says: “The big concern is there will be big additional costs for business and for society and that it in no way delivers the most effective and efficient form of consumer redress.
“We are concerned that huge amounts of detail are going to be left to either secondary legislation or will be determined by the Treasury without any Parliamentary scrutiny at all.”