Treasurer Josh Frydenberg wants to crack down on litigation funders and law firms so they can’t take more than their fair share of payouts from lawsuits.
Current class actions have been sparked by banking scandals, bushfire damage, insufficient coverage for COVID-19 business interruptions and cruise ship passengers after last year’s virus outbreak.
The treasurer wants to introduce a guaranteed minimum rate of return for class action members.
“This measure is of particular importance to ensure successful applicants are adequately compensated in their cases as well as preventing litigation funders and law firms from taking disproportionate fees in the process,” Mr Frydenberg said on Friday.
A parliamentary inquiry last year found class action rules were inadequate for all sides as international players enter Australia and cash in on the lucrative industry.
Laws have already been passed to make operators of litigation funding schemes get an Australian financial services licence and align disclosure laws with the US and UK, where many big funders are based.