Australian Law Reform Commission adopts Professor Hodges’ research in recommending a fundamental change to adopt regulatory redress

The Australian Law Reform Commission (ALRC) has recently published its Final Report Integrity, Fairness and Efficiency—An Inquiry into Class Action Proceedings and Third-Party Litigation Funders.

This Report makes a series of recommendations for the reform of class actions and third party litigation funding in Australia. Chapter 8 of the Report also includes the recommendation that the technique of regulatory redress should be expanded in Australia. That technique has been researched and championed over several years by Professor Hodges, and the ALRC Report cites various of his publications, especially the book C Hodges and S Voet, Delivering Collective Redress, New Technologies (Hart Publishing, 2018).

The relevant conclusions from the ALRC Report are:

Recommendation 23: The Australian Government should review the enforcement tools available to regulators of products and services used by consumers and small businesses (including financial and credit products and services), to provide for a consistent framework of regulatory redress.

8.75 International research has demonstrated that private enforcement through civil litigation is not as effective a regulatory tool as a combination of public regulation with redress systems—both collective redress and ADR through industry EDR and ombudsmen. From a consumer and small business perspective, there are significant advantages in collective redress both in terms of availability, costs and speed of obtaining a remedy when compared to private litigation. Moreover, the current enforcement settings in Australia have been shown to be deficient. The Banking Royal Commission has highlighted the need for systemic reform of law enforcement in the financial sector. There is no doubt that business as usual is not an option.

8.76 Accordingly, the ALRC suggests a fundamental change in the way in which regulators engage with the harm suffered by individuals and small businesses as a result of the conduct of entities which they regulate. Seeking redress to compensate for the harm suffered should become a key part of the regulatory enforcement model in the future.