New regulations announced today by the federal government, which bizarrely define class actions as ‘managed investment schemes,’ could stymie the compensation payouts of millions of Australians who have been robbed by big banks, harmed by faulty products, or deceived by corporate boards.
Josh Frydenberg’s regulations will wrap those participating in class actions in confusing and untested red tape, which the Australian Securities and Investment Commission (ASIC) has indicated it is confused by.
Mr Frydenberg announced his intention to introduce the new regulations just days after meeting with the US Chamber of Commerce, which has been lobbying to limit Australian class actions that affect its multinational members, like Johnson & Johnson.
Class Actions Australia, which is running the Keep Corporations Honest campaign in defense of ordinary class action members, fears the ramifications of the regulations could be significant.
“I don’t know what Mr Frydenberg’s discussed in his private meeting with the US Chamber of Commerce, but if you were an American multinational worried about Australian class actions this is exactly the kind of reform you would want to see,” said Class Actions Australia spokesperson Ben Hardwick.
“Class actions are obviously not ‘investment schemes.’ To suddenly define them as such makes zero sense unless your motive is to stymie class actions. No wonder ASIC was so thoroughly baffled by the Treasurer’s idea.
“A class action is a method through which ordinary Australians can seek justice when they’ve been hurt by a corporation. To suggest class action members are banding together in an investment scheme is insulting and incorrect. They are victims, not investors.
“Regulating a group of class action members as participants in an investment scheme will create all sorts of requirements that are suitable for investors, but ridiculous to require of victims.
“The outcome of this regulation will be to make it harder for everyday Australians who have been harmed to get funding for a class action, meaning fewer class actions and less justice. It will mean corporations face fewer consequences for bad behavior, making them more likely to try and get away with wrongdoing.
“I suspect Mr Frydenberg knows what he has done is not in the interests of ordinary Australians. His hope is that it’s all so complicated that in the midst of a pandemic no one will notice.
“But if you’re one of the millions of Australians who got ripped off by your bank and you’re expecting compensation from a class action you should care about what the government is doing. If you’re an ordinary person with a valid case against a powerful interest you should be deeply worried about these regulations. They are custom built to make life easier for corporations who do the wrong thing.”