Financial sector no longer main target: Class Action Risk report

Class Actions

The financial sector is no longer the biggest target for class action filings for the first time in more than a decade, new data from Allens' Class Action Risk 2022 report shows.

Data from 2021 shows the banking and financial sector was the third biggest target for new class action filings (down to 17% from 32% in 2020), after more than ten years managing heightened risk due to the fall out of the global financial crisis and a royal commission. The government sector was the biggest target (21% of filings up from 13% in 2020), with a broad range of claims filed against state and federal governments in 2021.

'We're seeing class action risk change, including a distinct change in class action claim targets. The number of filings against the banking and financial sector is tailing off after a long period in the spotlight, with the government and healthcare sectors now facing the most claims in 2021.

'It's an interesting shift, and appears to feed into a broader trend showing a growing range of types of claims across the class action landscape,' said partner Jenny Campbell

Overall, class action claims were down 13% over the year, but the short to medium term trend is for markedly increased filings compared to five years ago. Consumer claims were the most common type (23%) while shareholder claims – once the most common – have fallen to their lowest levels in a decade (15%).

Underscoring these shifts is a growing environment of uncertainty for litigation funding. Against a backdrop of recent reforms impacting litigation funders, the Federal Government took steps to further increase the regulation of the Australian funding market.

'Two words describe the litigation funding environment over the last couple of years – reform and uncertainty. The impact of this is seen in the marked decline in the level of shareholder claims and directly funded claims over the last two years. That uncertainty lingers with recent class action funding bill before Federal Parliament, which we expect will not be resolved until after the election,' said partner Belinda Thompson.

For the year ahead, the report predicts consumer claims to dominate further, giving rise to new and emerging issues in a broader range of consumer-facing sectors. Claims relating to climate change and privacy and data breaches are also areas to watch over the next year.

The annual Allens Class Action Risk report has been providing insight into the most current indicators and drivers of class action risk since 2015. Explore data from Class Action Risk 2022.

Notes for editors.

Allens is a commercial law firm working throughout Australia and Asia. Through its integrated alliance with Linklaters it provides clients access to 40 offices in 28 countries around the world.