Should the FCA regulate third-party litigation funding?
Litigation can be an extremely costly business, which understandably puts some potential claimants off beginning a dispute. Third-party litigation funding – whether this is a commercial funder, trade union or other organisation – can be confusing and unclear. Some have suggested that the Financial Conduct Authority – FCA – should be regulating third-party litigation funding. Let’s have a look at some of the debate surrounding this suggestion.
What is the main argument for FCA regulation?
Litigation – also known as class action – is potentially an environment which allows third-party funders to benefit financially from the process, according to the think tank The Adam Smith Institute. Ideally, third-party litigation funding would be an entirely transparent process, benefitting negatively-affected customers and with the overall winner being a just and accessible legal system for all.
Of course, for anyone considering pursuing a litigation claim, expert professional advice, such as that offered by Novo Modo, is essential. Specialists can advise on the details of the case itself as well as any potential funding options, as appropriate.
What other arguments are there?
Almost everyone would agree that the legal system has to be the real winner in this debate, and that quality litigation cases should not be reserved only for the wealthy. By not regulating third party litigation funding, we must ask ourselves the question whether we are causing people to have a distrust in the legal system.
What about the flip side?
A counter-argument would suggest that there should only be regulation in the event of a serious problem in the field, and that a set of principles which all funders must adhere to would be a more realistic course of action than full regulation.
Ensuring that anyone pursuing a claim which has been wholly or part funded by a third party fully understands every aspect of the claim, the financing and the potential implications of this funding on any compensation is absolutely essential as part of making the process as fair and accessible as possible.
