Calls for individuals to band together to take on big firms

PUBLIC battles over unfair bank charges and missold payment protection insurance have led for calls for individuals to have more rights to band together and take on big companies in the courts.

Shadow consumer minister Ian Murray is working on proposals which would give people in the UK the option to follow in the steps of Erin Brockovich, the environmental activist who won her case against the Pacific Oil & Gas company, winning a $333m payout for people affected by pollution.

The Labour party believes there is a need for members of the public to have the option to group together to settle disputes with big companies and would like to see UK-wide legislation to make it possible.

Murray, who is MP for Edinburgh South, said: “It is about putting power back in the hands of the consumer.

“If you have a lot of people who have lost a small amount of money they can take collective action and this system would allow people to do that.”

Currently Scottish law has no mechanism for class actions and in England the procedure is limited to certain organisations.

The action against PPI, which resulted in payouts worth millions of pounds to consumers was a class action taken by the Financial Services Authority. In some cases local authorities, regulators and consumer organisations such as Which? can also launch class actions on behalf of consumers.

However, Labour wants to extend the system to include individuals, who would be able to pool knowledge, expertise and resources in order to take on banks, utility companies, phone companies and other large organisations in the courts.

Murray said: “Research says 98 per cent of consumer disputes are for amounts of less than £1,000 in cash. But if you put people together that becomes a significant amount of money.

“We see this as a way of bringing companies to account.”

The shadow minister said the proposals being discussed were based around a Portuguese model, which allows people to be included in a class action taken on their behalf unless they specifically decide to opt out. “What we don’t want to do is to go down a US route where class action suits have become an excuse for lawyers to print money and companies are under considerable pressure all the time.”

Ian Rutherford, associate for business disputes and assets at Brodies Lawyers, said he thought it would be difficult to introduce legislation which would work for both England and Scotland.

“It has been discussed quite a lot, particularly with reference to the claims against banks.

“But whereas in England they are already geared up to do it, in Scotland you would be starting from nothing. In Scotland at the moment there is no sort of class action at all, whereas in England there is.”

The lawyer said recent years had seen lots of cases where bank customers had disputed charges in the sheriff courts – but that sheriffs often took widely different views on the interpretation of the law.

A spokesman for the Scottish Government said it intended to introduce a class action procedure in Scotland within the life of the current parliament.

“The introduction of a class action procedure is a recommendation of Lord Gill’s Scottish Civil Courts review. The Government agrees with that recommendation and will introduce legislation in the lifetime of the current Parliament to allow that to happen.”