Conduct in group proceedings and class actions under increasing scrutiny

Recent years have seen extraordinary growth in class actions in Europe and the UK in particular.  Claimed quantum in claims filed in the UK since 2016 exceeds €155bn.  In UK competition class actions, the claims filed since 2016 up to the end of 2024 have encompassed over 650 million class members. More information on trends is available here: CMS European Class Action Report 2025. 

These trends, and certain behaviours in class action claims, have attracted increasing scrutiny from regulators and government.  This alert summarises the more significant recent developments, including findings by the ASA in adverts by claimant law firms, the SRA’s investigations into handling of bulk claims, and the Department for Business and Trade’s review into the competition opt-out class action regime.

ASA rules against advertising for group claims

On 24 September 2025, the Advertising Standards Authority (the “ASA”) published three rulings on advertising for group action litigation.  The ASA ruled against each of the advertisers on the basis that their claims were misleading. The rulings are available here: JLG Legal Ltd - ASA | CAP (the “JLG Legal ruling”), Jones Whyte Law Ltd - ASA | CAP (the “Jones Whyte ruling”) and KP Law Ltd - ASA | CAP (the “KP Law ruling”).  The campaign group Fair Civil Justice (“FCJ”) submitted complaints to the ASA in relation to advertising for group litigation claims, but the ASA then gathered its own intelligence and made findings beyond the scope of FCJ’s complaint. 

In its rulings, the ASA identified a number of problems with the adverts and processes it investigated, including as follows: 

• In relation to the JLG Legal ruling, the ASA found that the relevant website was insufficiently clear on the point that e-signing an online form would legally bind the individual.  The ASA said, “…consumers were likely to e-sign without understanding that by doing so they were signing a legal binding contract…  We concluded that the ad did not make clear than by e-signing, consumers were signing a legally binding contract, and it was therefore misleading.”
• The ASA reviewed adverts saying that there was “No Upfront Cost.  No Win No Fee.  Free Evaluation” and that the “Compensation amount could be ‘up to £10,000’”.  As to the commercial arrangements with claimants, the JLG Legal ruling stated that “We understand that if the claim was won, Johnson Law Group deducted a fee of up to 50% (including VAT) of the compensation awarded, which included all their expenses and costs, plus the costs of insurance, which was up to £70.”  It went on to say “We also understand that Johnson Law Group’s contract allowed that clients may be liable for costs, in circumstances we considered they would not reasonably expect.”  The ASA ruled that certain of the adverts and the landing page, taken together, “did not present material information about the fee and how it was calculated” and breached the Advertising Code as in place prior to 6 April 2025.  The ASA also criticised adverts that said claimants may receive up to £10,000, saying “because we have not seen evidence that a significant proportion of claimants in Johnson Legal Group’s diesel emissions cases would receive £10,000, and the ads did not make sufficiently clear that the compensation amount ‘up to £10,000’ was prior to the deduction of up to 50% in fees and the cost of insurance, we concluded the claims were misleading.”
• In the Jones Whyte ruling, similar to the JLG Legal ruling, the ASA took issue with the use of the term “no win, no fee” and concluded that the relevant advert and the landing page that the advert linked to “together did not present material information about the fee and how it was calculated, and that consumers may be liable for costs in some circumstances, in a clear and timely manner”.
• The KP Law Ruling examined the website and advert for the lead generator “Join the Claim”.  The ASA concluded “that a significant proportion of visitors to the [Join the Claim] website would not understand that the purpose of Join the Claim’s business was to generate leads to sell on to law firms running group action claims… We therefore conclude that [the relevant advert] falsely implied that Join the Claim was acting for purposes outside its business and did not make clear Join the Clam’s commercial intent.”

Upheld complaints on misleading advertising are not unusual, but the context makes these significant. It is no coincidence that these three rulings were published on the same day. For several years the ASA has had a practice of simultaneously investigating two or more advertisers in the same industry in relation to similar practices. The heading to each ruling states that it forms part of a wider piece of work on ads relating to group action litigation. Group litigation is therefore an area of concern for the ASA, and further investigations and upheld rulings are to be expected.

Finally, many of the issues investigated related to misleading online choice architecture, sometimes known as “dark patterns”. This is a practice in which website operators design their sites to “nudge” consumers towards choices that may not be in their own interests. For example, the JLG Legal ruling flags the language “signed with intention to enter into a legally binding contract” which, despite being a legal term of art, would not indicate to the average consumer that they were signing up to a binding contract then and there. Dark patterns can also use small fonts which make consumers likely to overlook important wording, and links to Ts & Cs that only appear after the signature box. Practices of this kind have been a recent focus, not just for the ASA, but also for the statutory consumer regulator, the Competition and Markets Authority (the “CMA”). With the CMA having recently acquired major new powers to impose heavy fines on its own initiative, without applying to court, group litigation businesses should make their customer communications clear and transparent to avoid CMA intervention.   

Conduct of litigation by non-qualified staff

Particularly in the volume and group claims sectors, many law firms use non-qualified legal staff to assist in the progress of cases.  On 16 September 2025 the High Court handed down judgment in Julia Mazur, Jerome Stuart v Charles Russell Speechlys LLP [2025] EWHC 2341 (KB) which is likely to cause significant difficulties for law firms acting in this space until the effects of the judgment are better clarified. 

In summary, the court ruled that non-qualified staff are not permitted to “conduct” litigation even when doing so under the supervision of an authorised solicitor, but non-qualified staff are permitted to “support” authorised solicitors.  The problem is that in many cases there is no bright line between where “supporting” ends and “conducting” begins and so many firms active in the group claims market are presently unclear on precisely what activities their unqualified staff can perform and what activities they are not permitted to perform. 

The SRA and the FCA issue warning over poor practices in motor finance commission claims

In late July, the Solicitors Regulation Authority (the “SRA”) and the Financial Conduct Authority (the “FCA”) issued warnings to both claimant law firms and claims management companies (“CMCs”) over poor practices in motor finance commission claims (SRA | SRA and FCA warn law firms and claims management companies over poor practices in motor finance commission claims | Solicitors Regulation Authority). 

The SRA and FCA said that they expect law firms and CMCs to inform clients if a redress scheme exists, or if there is a realistic prospect of such scheme being introduced “which would allow them to pursue a claim for themselves, free of charge.”  The SRA and FCA also said they were concerned about the conduct of some law firms and CMCs in this area, including on “the volume and accuracy of marketing materials, and how information is shared or verified when clients are passed on from third parties” and of “law firms and CMCs providing inaccurate or misleading information on the likelihood of success or potential value of a claim.”

A large number of claimant law firms, CMCs and litigation funders have been investing and preparing for an expected large number of claims in this sector.  The intervention by the SRA and FCA shows that they are concerned by consumers potentially being diverted to unnecessary litigation in circumstances where a compensation scheme could be put in place and which may obviate the need for litigation.

SRA finds numerous problems in conduct of high-volume claims

On 22 August 2025, the SRA published the findings of its thematic review into firms operating in high-volume consumer claims (SRA | SRA acts on concerns about law firm practices on high-volume claims | Solicitors Regulation Authority.  The SRA identified troubling conduct, and the introduction to its review provides, “We, and others in the industry, are growing increasingly concerned about issues we are seeing across the high-volume consumer claims market.  Our concerns pertain to this area of the market not working as well as it should, which is leading to potential risks to consumers, and eroding trust and confidence in the solicitors’ profession.”  The introduction also states, “… the number of firms we are actively investigating in relation to potential misconduct has risen sharply over the past 12 months.  As of 31 July 2025, we have 95 open investigations relating to 76 firms, who between them handle hundreds of thousands of claims.”  On any view, the problems identified by the SRA are widescale.

As to the scope of its review, the SRA identified 129 firms active in the consumer claims market, “who between them were handling more than 2.4 million live claims”.  The SRA sent those firms mandatory surveys and then visited 25 of those firms in order to conduct interviews, review client files, and review learning and development records and policies and procedures on how consumer claims work was handled.  

Of the 25 firms visited, “18 had litigation funding in place” but “only six of the 18 firms visited who use litigation funding had included checks on how a litigation funder sourced investment funds in their due diligence, and fewer still included sanctions (four firms) or anti money laundering checks (five firms).”  Commenting on the importance of these checks, the SRA said “It was concerning that only a small proportion of firms were including these types of checks in their due diligence, and that some firms did not know where the funders sourced the funds they were lending to the firm.”

The SRA also considered whether the funding agreements were in the best interests of the clients: “During our visits we identified concerns about litigation funding agreements between clients and funders that may not be in the clients’ best interests, and where the advice given to clients may not be compliant with our Standards and Regulations.  We have opened investigations into those matters.”  The SRA review identified that these were not isolated problems, “We reviewed 28 files where the firm had secured litigation funding for the claim.  On 21 of these files, the terms of the litigation funding agreement impacted the level of damages/compensation the client received, the client’s obligations, and the risks of the claim, such as the withdrawal of litigation funding in certain circumstances.  In these cases, we would expect firms to inform clients of the relevant terms of the litigation funding agreement in a clear and readily understandable manner.  We were worried by how few firms did this.  On 10 of these 21 files, clients were not given any information at all about the litigation funding agreements in place…  This falls short of our requirement to ensure clients can make informed decisions about how their matter will be handled and the options available to them.  Firms should fully inform clients about litigation funding agreements that impact on their matters.”

The review identified several further categories of failings, including:

• Poor compliance with regulatory requirements when arranging After the Event insurance;
• Weak oversight of referrers’ compliance with regulatory standards;
• Inadequate client onboarding processes, including checks on client ID, sanctions and conflict of interest; and
• Inadequate advice to clients on claim merits and prospects.

Although there will inevitably be some non-compliance in any given sector, the SRA identified a surprising prevalence of problems.  More details will emerge as the SRA publishes the results of its ongoing investigations.

The SRA followed up this review by publishing a discussion paper and questionnaire on 19 September 2025 (High-volume consumer claims - discussion paper).  The questionnaire is open until 14 November 2025.  It asks 13 open-ended questions that go to the heart of how high-volume claims are conducted.  One question is framed around problems caused by the term “no win no fee” and asks whether use of the term should be banned.

Opt-out competition class actions

DBT call for evidence

On 6 August 2025, the Department for Business and Trade (“DBT”) launched a call for evidence on the opt-out collective actions regime (Opt-out collective actions regime review: call for evidence - GOV.UK).  This competition class action regime was introduced in 2015 and, 10 years on, the DBT is considering “whether it is delivering access to justice for consumers in a way that brings value without being disproportionately burdensome on business.”   DBT observes that the number of claims filed and the costs incurred are far higher than was set out in the government’s impact assessment prior to the regime being introduced.  It also states that the caseload of the CAT has developed in unexpected ways.  For example, it had been anticipated that the majority of claims filed would be follow-on decisions which relied on the binding findings of a regulator. In fact, approximately 90 per cent of claims filed are stand-alone, with the proposed class representative seeking to prove a breach of competition law. 

The call for evidence centres around questions about access and funding, scope and certification of cases, ADR and distribution of funds. On the latter, specific questions are posed around consumer information, transparency and whether returns are “meaningful” for individual class members.  This call for evidence is significant because it marks the first comprehensive review of the opt-out collective actions regime since its introduction, at a time when the scale, complexity, and financial impact of such cases have far exceeded original expectations. 

Any significant changes to the competition class action regime will require primary legislation.

Distribution levels in competition class actions

On 10 and 11 September, the Competition Appeal Tribunal (the “CAT”) held a “Stakeholder Entitlement Hearing” in Gutmann v First MTR South Western Trains Limited and Stagecoach South Western Trains Limited (“Boundary Fares”).  In this claim, one of the defendants agreed settlement terms which were approved by the CAT in May 2024.  Under the settlement agreement, the settling defendant agreed to pay: up to £25 million to class members, £4.75m to the class representative as costs, and £750,000 towards costs associated with distribution.  The class representative then sought to distribute the £25m figure, but only £216,485 was claimed by class members.  This was in spite of the Tribunal structuring the settlement and the sum available into three “pots” to help maximise take-up. 

The settlement agreement provided that, to the extent that less than £10.2 million was claimed by the class, the class representative could apply for the figure up to that amount and balance in relation to “costs”.  That sum would then be shared between the claimant law firm, funder, insurers, barristers and other parties engaged directly or indirectly by the class representative to pursue the claim (together, the “Claimant Stakeholders”). 

The issue before the “Stakeholder Entitlement Hearing” was for the Tribunal to decide on the destination of approximately £9.9m, being the delta between £10.2m and the £216,485 distributed sum.  Prior to the hearing, the Claimant Stakeholders and the Access to Justice Foundation (the “AtJF”) agreed that the AtJF should receive around £3.78 million.  At the hearing, the Tribunal approved this payment to the AtJF and also directed that the remaining balance should be split between the Claimant Stakeholders, but it reserved judgment on how that sum should be split between those entities.  Separately, the Tribunal expressed concern about the very low levels of distribution to the class in this case. 

It is worth setting out the numbers: the £216,485 represents c. 0.8% of the £25m available to class members.  During the case, the Class Representative was paid £348,996 in adverse costs attributable to the settling element of the case.  When added to the £5.5m paid in the settlement agreement, the class representative had received a total of £5,848,996 even prior to any further payment authorised by the Tribunal at the Stakeholder Entitlement hearing.  This is 27 times the sum distributed to the class members.  With the Tribunal approving an approximate further £6m to go to the class representative, the Claimant Stakeholders will, between then, receive nearly 55 times the amount distributed to the class.  When the competition class action regime was introduced in 2015 it was not envisaged that it would lead to these sorts of outcomes and the DBT review is very timely.

Litigation funding 

All eyes are on the Ministry of Justice as it digests the report of the Civil Justice Council (the “CJC”) into litigation funding (Review of Litigation Funding - Final Report).  The report set out 58 recommendations including statutory regulation of litigation funding, enhanced consumer protection, capital adequacy requirements, anti-money laundering measures and improved transparency.  The CJC report proposed a twin track to its recommendations, with initial legislation to reverse the effects of the PACCAR decision and that such “legislative reform should not wait for further consideration of any wider reforms that the CJC may recommend.”  The Government has not yet published any draft legislation to reverse PACCAR or implement any of the other recommendations of the CJC.  It is possible that in light of the Court of Appeal’s July 2025 decision that renegotiated funding agreements based on multiples of investment were not Damages Based Agreements and so were permissible (Ruling) that the MoJ has decided that there is no urgent need to reverse PACCAR.  

In light of the widespread approval of the CJC’s final report, it does seem likely that the government will move to implement some or all of the CJC’s recommendations.  Several of those recommendations will require primary legislation.  We may not get any indication on the timings of next steps until the next King’s Speech.

Conclusion

With the rapid expansion of class actions and group proceedings it is quite proper that the government and regulators are carefully monitoring developments including to ensure that rules and regulations are followed.  The relevant rules are for the benefit of claimants and consumers and to ensure smooth administration of justice.  More broadly, as more claims in the CAT are resolved we obtain better visibility on who is truly benefitting from the competition class action regime.  That regime risks its credibility unless there is a dramatic improvement in distribution rates. 

This article was prepared with the assistance of Ilia MacLeod, trainee in CMS Edinburgh.  CMS acts for Fair Civil Justice.