Law Commission explores new class actions regime for consumer law claims in England and Wales

The Law Commission launched a project in April to consider introducing a new class actions regime for consumer claims. The review, which is backed by the Department for Business and Trade (DBT), will focus on the benefits and risks of introducing a dedicated opt-out collective actions regime for consumer law claims, including whether it would improve consumers' access to redress in light of alternative mechanisms for enforcing consumer law such as public enforcement action and alternative dispute resolution. 

The Law Commission's review follows the DBT's call for evidence on the opt-out collective actions regime available for competition law claims in the Competition Appeal Tribunal, a decade after its launch in 2015. The outcome is expected to inform future separate consultations on potential changes to the opt-out regime, but will also be taken into account by the Law Commission in this project.

Group and collective actions 

Although there is currently no single unified class actions regime in England and Wales, a variety of procedural mechanisms for group actions and collective proceedings are firmly established under the Civil Procedure Rules (CPR) and the Competition Act 1998 (as amended by the Consumer Rights Act 2015).

Under CPR 7.3 and 19.1, multiple claimants can bring claims using a single claim form where the claims "can be conveniently disposed of in the same proceedings". 

The court can also order a large number of related claims to be managed collectively using a group litigation order (GLO), where the claims raise "common or related issues of fact or law". GLOs operate on an opt-in basis with a group register of participating claimants. 

Under the representative action procedure, a claimant may represent a group of members, most commonly on an "opt-out" basis, provided that they all have the "same interest" in the claim, which is a threshold that has been interpreted narrowly by the courts, as evidenced by the landmark data privacy case of Lloyd v Google. 

The only true opt-out regime in England and Wales currently exists before the Competition Appeal Tribunal (CAT), which, since 2015, permits collective proceedings for infringements of competition law only. Some recent actions appear to frame claims as competition law breaches for conduct that has been pursued as a consumer law or data privacy breach in other jurisdictions. This category of claim is proving increasingly popular and there are: there 65 collective proceedings currently listed in the CAT. Collective proceedings can also be brought on an opt-in basis. 

The case for change

Currently, claimants cannot bring a claim for consumer law infringements under the competition regime available in the CAT. They can only rely on one of the group mechanisms available under the CPR. However, each of these routes has its own requirements and thresholds, is open to procedural challenge, and judges have wide discretion to consider whether a route is appropriate for the claims in question. 

An opt-out claim bypasses many of these procedural requirements, especially as members of the class do not need to be identified prior to the action taking place, nor give their consent to being included in the class. This is of particular significance because most group claims rely on third-party litigation funding, which in turn is dependent on a claim having sufficient scale; in an opt-out claim class members are automatically included unless they expressly opt out, which means the value of the claim is not dependent on claimants signing up in advance. 

Nor does an opt-out claim necessitate the costly and time-consuming exercise of book-building the class, which third-party litigation funders may regard as an additional layer of costs and risk. The limitations of the mechanisms under the representative actions procedure and the collective action regime in the CAT have led claimants, claimant law firms and consumer groups to call for a broader, more flexible collective actions framework for consumer claims in the UK.  

The Scottish Civil Justice Council is currently considering the introduction of an opt-out procedure as part of its group proceedings regime under the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018.

Review aims 

The review will focus on the benefits and risks of introducing a collective class actions regime for consumer law claims, and will also make recommendations as to how such a regime should be designed. The objectives are twofold: improving consumers’ access to redress through securing redress in court and ensuring damages effectively reach the affected class; and promoting the efficient and proportionate conduct of litigation.

The Law Commission has published terms of reference for the project which set out the issues for consideration, including what would actually constitute a 'consumer law claim'; whether the regime should allow for opt-in as well as opt-out claims; various aspects of how claims should be practically managed; and damages, costs and settlement, including how claims are funded, accounting for reforms to litigation funding as a consequence of the Civil Justice Council’s review, as set out in its final report published in June 2025. 

The Law Commission also makes clear that the project will consider whether certain sectors are disproportionately targeted by litigants and the potential for opt-out collective proceedings to be exploited, creating a "litigation culture". The project will also look to the findings of the UK government's review of the current opt-out regime for competition claims for further guidance on how any new regime should be structured.

While work on the project is not expected to start until the autumn, the Law Commission is inviting stakeholders to respond to an initial scoping questionnaire. The questionnaire seeks views on the risks and benefits of an opt-out consumer class actions regime and the features to be included within the design of such a regime, including any that promote efficient conduct of litigation at a proportionate cost. This is likely to attract views on the current litigation funding landscape, including third-party litigation funding. 

Responses received will not be quoted or attributed publicly in the Law Commission's consultation paper or future publications with a view to encourage frank and timely engagement, although it cannot guarantee that confidentiality will be maintained in all circumstances. 

Osborne Clarke comment

The Law Commission's review is another signal that the government may be open to the introduction of a broader class action regime. The introduction of such a regime could create a powerful instrument for claimants to collectively seek compensation for breaches of consumer law, especially given the increased flexibility provided by opt-out claims, significantly increasing financial and reputational exposure for businesses accused of consumer law breaches. 

In particular, a shift to an opt-out consumer class action regime would significantly heighten the litigation risk for businesses when viewed against the Competition and Markets Authority's (CMA) increased enforcement posture since the introduction of the Digital Markets, Competition and Consumers Act 2024 (DMCCA). The DMCCA empowers the CMA to enforce consumer law directly, impose fines of up to 10% of global turnover and pursue investigations without recourse to the courts. 

Since April 2025, the CMA has launched several investigations, ordered the refund of £760,000 to consumers and imposed fines totalling £4.7 million. It is also focusing on drip pricing, fake reviews and online choice architecture. An opt-out consumer class action regime would enable claimants to leverage CMA findings or broader market scrutiny as a potential springboard for damages claims on behalf of a large consumer class.  

The Law Commission's review comes alongside its separate and ongoing review of the UK's product liability regime under the Consumer Protection Act 1987 (CPA). If the product liability regime is ultimately reformed in a way that enhances consumer protection (largely aligning with the reform of the EU's Product Liability Directive which was implemented into UK law by the CPA), an expanded opt-out consumer class mechanism has the potential to materially increase the risk of large-scale product liability class actions beyond those traditionally brought via a GLO in the English High Court. 

For businesses, the combination of enhanced consumer protection and a procedural mechanism enabling mass consumer claims would increase both the volume and value of consumer class actions. Businesses may, however, be reassured by the explicit acknowledgement in the Terms of Reference that the Law Commission is alive to the potential exploitation of a consumer class action framework. The DBT's concern to "find the right balance between achieving redress for consumers and limiting the burden on business", as expressed in its 2025 call for evidence, will doubtless remain a key consideration in this Law Commission Review. 

It is also likely that the Law Commission will consider any new regime in the context of the practical and procedural impediments to opt-out collective actions in the CAT. Recent procedural jurisprudence focuses on fair distribution of damages to the consumer class and the impact of funders' fees on awards, issues which have had a material impact both on the progress of CAT claims and on the appetite of third-party litigation funders to back them. Any wider regime will need to address these problems. 

The Law Commission is also likely to have regard to the ongoing implementation of the EU Representative Actions Directive (RAD) which became applicable across member states from June 2023. The RAD enables qualified representative entities to bring collective actions for damages or injunctive relief on behalf of EU consumers in respect of infringements of EU laws, with member states having the option of choosing to implement opt-in or opt-out mechanisms. Collective actions brought in Europe (and the UK) tend to be financed by third-party litigation funders, backed by investment vehicles such as hedge funds, asset managers, and private equity houses. As funders' fees are usually paid out of the eventual settlement or damages award, there is the potential for them to make substantial returns on their investment. 

If collective redress mechanisms in the UK are expanded beyond the competition regime in the CAT, then suitable and flexible funding structures need to be available to support them. To that end, the Civil Justice Council's final report on its review of litigation funding in the UK proposes a series of recommendations for reforms to litigation funding. These include a set of minimum baseline regulatory requirements and additional safeguards for collective proceedings to protect both consumers and businesses from unmeritorious and speculative claims.   

The Law Commission can only recommend changes to the law. Any such recommendations would require further consultation and parliamentary consideration before they could be implemented. This process takes time. Nevertheless, businesses should consider assessing the potential risks and challenges that a new class action regime might present, even if such a regime remains some way off. 

James Harnett, a trainee solicitor at Osborne Clarke, contributed to this Insight.