Class Action Reform Could Add £24bn a Year to UK Economy, Study Finds

A new report claims that improving the UK’s collective actions regime could boost the economy by as much as £24 billion a year, by deterring anti-competitive behaviour and giving consumers and small businesses better access to justice.

But while the opt-out class action system was once hailed as a landmark reform, it now faces serious challenges — from procedural delays to the fallout of the PACCAR Supreme Court ruling, which has shaken the funding foundations of the entire sector.

A system under strain

According to Stephenson Harwood’s latest report, the Competition Appeal Tribunal (CAT) — the specialist court handling collective actions — has not lived up to its original promise.

The CAT’s collective proceedings regime, introduced in 2015, was meant to revolutionise consumer redress. For the first time, multiple claimants could be represented in a single, “opt-out” claim for competition law breaches, meaning individuals were automatically included unless they chose not to participate.

The aim was simple:

• Make it easier to hold large corporations to account,
   
• Encourage fair pricing and market behaviour,
   
• And promote innovation through deterrence.
   

However, data from litigation analytics platform Solomonic shows that the regime has stalled. After a record 17 new collective claims in 2023, only three cases have been filed in the first nine months of 2025.

Stephenson Harwood says that if the regime were made to function effectively, it could prevent between £12.1bn and £24.2bn in harm to consumers and SMEs every year. That’s equivalent to a 1% annual boost to the UK economy.

The PACCAR problem: litigation funding in crisis

A key reason for the slowdown is the Supreme Court’s 2023 decision in R (PACCAR Inc) v Competition Appeal Tribunal.

That ruling determined that litigation funding agreements (LFAs) — which underpin the majority of collective actions — should be classified as damages-based agreements (DBAs) under the Courts and Legal Services Act 1990.

The result? Unless they comply with DBA regulations (which most do not), many existing LFAs are unenforceable.

Without reliable third-party funding, few collective claims can proceed. The cost of bringing a major competition case can exceed £10 million, and class representatives are rarely able to fund these cases themselves.

This has had a chilling effect on both new and ongoing cases. Defendants, aware of the funding uncertainty, have also begun using strategic procedural challenges to delay or derail claims.

“The regime stands at a critical juncture, facing challenges that undermine its ability to operate effectively,” said Genevieve Quierin, partner at Stephenson Harwood.

“We need to nurture the system by expanding the regime beyond competition-only claims, stronger case management, improved consumer engagement, and a legislative reversal of the uncertainty permeating the system.”

Delays and inefficiency

Even without PACCAR, claimants have long complained that collective proceedings take years to progress through the CAT.

From certification to settlement, cases can span five to eight years, with extensive procedural hearings, disclosure disputes, and appeals. In many cases, by the time a settlement is reached, distributions to consumers are minimal, with much of the recovered sums redirected to access-to-justice charities rather than the affected class members.

Stephenson Harwood’s report calls for the “front-loading” of key case-management and funding decisions to speed up proceedings and provide clarity earlier in the process.

The firm argues that funding approval should occur at the certification stage, not later in the case. This would give all parties — from funders to defendants — a clear view of how the claim is financed and prevent disputes that currently emerge mid-litigation.

A roadmap for reform

The report proposes a series of reforms to strengthen the UK’s opt-out collective action framework, including:

1. Legislative reversal of PACCAR – to clarify that LFAs are not DBAs and to restore certainty for funders and class representatives.
    
2. Expansion beyond competition law – allowing opt-out collective actions in areas such as data protection, consumer protection, and financial services.
    
3. Earlier class identification – to improve consumer engagement and ensure potential claimants are aware of the case from the outset.
    
4. Investment in CAT resources – including more judges, registry staff, and specialist case managers to deal with complex mass claims efficiently.
    
5. Enhanced consumer participation – such as user-friendly portals for registration, status updates, and direct compensation distribution.
    
6. Better support for class representatives – including early case management, cost budgeting, and timetabling to control expenses and prevent tactical delays.
    

The report also notes that the UK regime’s effectiveness depends on institutional confidence. Without adequate judicial and administrative capacity, the system risks becoming too slow and costly to deter wrongdoing — the opposite of what Parliament intended when it created the CAT’s opt-out model.

Voices from the sector

Former CAT president Sir Gerald Barling endorsed the report’s findings, warning the government against weakening collective redress mechanisms.

“The government should not be tempted to go down a path that would be a significantly regressive step — curtailing or removing the only means by which multiple claimants, each suffering relatively small amounts of financial loss, can achieve justice.”

Barling’s comments echo the concerns of claimants’ lawyers who argue that the UK is already lagging behind other jurisdictions such as the US, Netherlands, and Australia, where class actions have become a vital accountability tool.

A divided legal community

Stephenson Harwood is not alone in its analysis. Its report follows two other major studies published this year:

• Faegre Drinker’s report (October 2025), based on polling by Ipsos and interviews with major UK corporates, found that 69% of adults were unaware they had been automatically included in an opt-out claim, and two-thirds believed explicit consent should be required.
   
• CMS’s report earlier this year focused on the financial burden that collective actions place on businesses, arguing that the system needs safeguards to prevent speculative or duplicative claims.
   

These contrasting perspectives highlight the ongoing debate:
 Should the UK make it easier for consumers to join collective claims — or should it rein in what some see as an overly litigious system imported from the US?

Calls for legislative clarity

The legal community has been increasingly vocal in calling for swift legislative intervention to reverse PACCAR and restore certainty to litigation funders and claimants.

Ahead of the government’s review of the opt-out regime, which closed last week, representatives from 20 major law firms — including Mishcon de Reya, Stewarts, Freeths, and Scott+Scott UK — submitted a joint statement urging reform.

The submission, supported by the Collective Redress Lawyers Association (CORLA) and various litigation funders, called on the Department for Business and Trade to introduce urgent legislation confirming that LFAs fall outside the scope of DBAs.

“This issue has created a great deal of uncertainty that is blocking access to justice for ordinary people taking on powerful corporations accused of wrongdoing,” said Martyn Day, co-president of CORLA.

The access to justice argument

Supporters of collective actions stress that without them, most consumers would never seek redress.

Competition and consumer harm cases often involve small, dispersed losses — for example, £10 per person overcharged by a supermarket or streaming platform.
 Individually, such claims are uneconomical to pursue. Collectively, they can expose billions in unlawful gains and deter repeat misconduct.

Stephenson Harwood’s modelling suggests that a well-functioning class action regime could deter between £12bn and £24bn in anti-competitive behaviour annually, freeing up resources for innovation and lowering prices.

Critics, however, warn that without tight oversight, the system risks “litigation tourism” — attracting opportunistic claims driven by funders rather than genuine consumer harm.

Towards a broader regime

Currently, only competition law infringements can be brought as opt-out collective proceedings in the CAT.
 Stephenson Harwood’s report argues that this limitation is arbitrary and outdated.

Expanding the regime to include data protection breaches, consumer product defects, and financial mis-selling could bring the UK into line with the EU’s Representative Actions Directive, which requires Member States to provide collective redress for consumers.

Although the UK is no longer bound by EU law, many lawyers argue that aligning with European standards could strengthen London’s reputation as a global disputes centre.

A fragile balance: efficiency vs fairness

While most practitioners agree that reform is needed, opinions diverge on how far it should go.
 Defendant firms warn that overly broad reforms could encourage frivolous or duplicate claims, particularly if class certification thresholds are lowered.

On the other hand, claimant firms argue that existing procedures already provide robust safeguards — including judicial certification, funding scrutiny, and court-approved settlement distribution.

The challenge is to strike a balance between protecting consumers and maintaining procedural efficiency.

What’s next for collective redress?

The government’s review of the opt-out regime, led by the Department for Business and Trade, is expected to publish its findings early next year.

It is widely anticipated that the review will recommend legislative clarification following PACCAR, alongside measures to streamline case management and improve consumer engagement.

Whether ministers choose to broaden the regime beyond competition law remains uncertain. Political appetite for reform will depend on whether collective actions are seen as a tool for fairness — or a potential burden on business.

Final thoughts

The UK’s opt-out collective actions regime was created to level the playing field between powerful corporations and ordinary consumers.
 Ten years on, it risks becoming a cautionary tale of over-complex regulation and under-resourced justice.

With billions in potential economic benefit at stake, the PACCAR fallout has become more than a technical funding issue — it is now a litmus test for the government’s commitment to access to justice.

If ministers heed the legal sector’s calls, the UK could yet reclaim its position as a global leader in fair, efficient, and well-funded collective redress.

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