US-style class action system needed

The advisory public body’s document – Improving Access to Justice through Collective Actions – made a series of 11 recommendations to the Lord Chancellor.

The recommendations included introducing a system of generic collective action, with claims being brought on an opt-in or opt-out basis.

Such moves would have significant benefits for UK pension schemes, which can currently only launch actions in the US against US listed firms.

Lovells partner Nicholas Heaton said: "The idea is to amend the rules to make collective claims easier and more efficient.

"Presently, if a group lodges a claim they are treated as numerous individual claims, if the proposals go through this would no longer be the case."

The significant change, he explained would be the opt-in or opt-out options.

He said: "What is proposed is that if the ruling goes in favour of the claimants it will not only apply to them. For example, if some members of a scheme claim damages and win, the ruling will

affect all those in the scheme not just the claimants."

Heaton added: "This will facilitate access to justice for people with small claims. They can group them all together in to a bigger claim, which would make it more worthwhile to pursue."

Barrack, Rodos and Bacine consultant Keith Bray added: "Class actions are big business in the US.

"The way it works is if a stock drops in value resulting in a significant loss of money for the shareholder, the position is scrutinised to establish whether there has been any form of wrong doing. If so, institutional investors can make a claim and can recover a significant amount of money."