Financial Services Act 2010 – class actions removed

The Financial Services Act 2010 received Royal Assent on 08.04.2010, being amongst the last few pieces of legislation rushed through parliament before it was dissolved.

One of the most interesting and controversial parts of the bill had been the introduction of collective actions for consumers allowing them to bring American style class actions against financial services firms, including banks and insurers as well as smaller firms providing financial advice.

However, these proposals received stiff opposition from Tory peers and the government dropped the measures in order to see the bill through parliament.

What has been included in the Act though is an amendment to previous legislation which now allows the FSA to draw up consumer redress schemes where it considers there has been “widespread or regular failure” from financial services firms and that as a result consumers have lost, or may lose, money. Previously such schemes had to be approved by the Treasury before being implemented.

Appetite remains high amongst the Labour party though for such class actions and redress schemes and it has been suggested that the proposals would be looked at again in the new parliament. How they would fare in an increasingly likely hung parliament is difficult to predict though.