EU Allowing Consumers to Take Collective Legal Action Could Be Costly

The EU Commission has announced that it intends to grant consumers the right to form collective group actions across the European Union. The proposals are quite far-reaching with the EU intending to levy fines based on `company turnove, it cannot be cheap to cheat.’ Read more from the EU news site here.

Dr. Henning Schaloske, partner at Clyde & Co, comments: “EU Commission proposals to grant consumers the right to form group actions could have a seismic impact on consumers, industry and the insurance sector.”

“Currently, access to the courts on a group basis varies significantly within Europe and there is no mechanism for seeking a multi-country collective redress action at European Union level. This proposal may please consumers, but is likely to cause alarm in corporate and insurance circles.”

“If these proposals went ahead, it’s likely to create a perfect environment in which super-charged claimant lawyers and litigation funders could thrive.”

“Change is not imminent given these proposals would need approval by national governments and the European Parliament. However, their backing by Vera Jerounva the EU’s Justice Commissioner combined with support from Commission President Jean-Claude Juncker suggests progress will be made.

“Insurers will need to move fast to communicate concerns around the risk of claims inflation and the unintended impact on consumers in terms of higher premiums.”

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