ASIC not consulted on new regulation of litigation funders
ASIC told a parliamentary inquiry into litigation funding it was not consulted about its role in regulating class action funders ahead of the public announcement by Treasurer Josh Frydenberg in May. The watchdog previously told the Australian Law Reform Commission that it had reservations about being responsible for regulating how class actions are funded. The new rules were issued in response to growing concern that Corporate Australia is facing an increasing number of class actions funded by unregulated groups.
The corporate watchdog says it was not consulted with about its new role regulating class action funders and only found out about the new rules the day before they were announced by Treasurer Josh Frydenberg.

The Australian Securities and Investments Commission (ASIC) has revealed it was kept out of the loop before Mr Frydenberg announced on May 22 that all litigation funders would be required to hold an Australian Financial Services Licence (AFSL) like investment managers and financial planners and will be policed by ASIC.

ASIC says it was not consulted with before Treasurer Josh Frydenberg announced the corporate cop would also be responsible for policing litigation funders. Credit: Alex Ellinghausen

The new rules came into place amid growing concerns corporate Australia was facing a spike in the number of class actions being funded by unregulated groups, which bankroll cases against companies and take a large cut of any damages won by class action claimants.

Mr Frydenberg has also loosened listed company disclosure rules until November to safeguard listed groups from class actions at a time when it is difficult for directors to properly assess the impact of the coronavirus and ever-changing restrictions on their businesses.