Joining a class action

Class actions may seem like a good idea, but there are some important things you need to know about how class actions work (like costs) before you decide whether or not to be a part of one.

What is a class action?

A class action is a lawsuit that is brought on behalf of a group of people (called plaintiffs) against someone (usually a company) for harms the company caused to the group. Generally, the claims made in a class action must arise from similar circumstances and share common issues that can be resolved by the court for the whole group. 

Is a class action a good thing?

Class actions are an efficient way to get compensation for a large group of people impacted by the same harms caused by the same company. Before class actions existed, each person would have to start their own lawsuit against a company, pay for their own lawyers, provide their own evidence and bear all the other risks that come with running their own case. It was difficult for some people to get compensation because of the cost and it wasted a lot of court time hearing the same issues many times. Class actions offer everyone in the same situation access to compensation without them having to bring their own claims.

While class actions can give people access to justice without them having to hire their own lawyer, they are not free. Lawyers and expert witnesses can be very expensive. Class actions generally work on a no win-no fee basis – that means that plaintiffs do not have to pay the costs of the class action if they don’t win. In exchange, if plaintiffs win, they will have to pay a part of their payout to either their lawyers, or someone else who has agreed to fund the cost of the class action (often called litigation funders). Sometimes this can be a large part of their payout, it is common for 30% or more going to the lawyers, depending on the total amount awarded to the group. In the context of your super, this can be a very large amount. Sometimes people get much less than they would have if they had started their own lawsuit or made a complaint to the Australian Financial Complaints Authority. It can also take many years before a class action is finished.

Do I need to join a class action?

No. In Australia, if you are part of the group of people covered by the class action, you are automatically included, even if you did not sign up with the law firm. 

If you don’t want to be part of the class action, you can opt out before the deadline set by the court. If you opt out of a class action, you can bring your own claim against the company. But you won’t get any money that is awarded as part of the class action. If you stay in the class action, you will be entitled to any money the class wins, but you won’t be able to bring your own claim.

It is also important to know that AFCA may refuse a complaint about a financial business if there is already a class action against that business for the same issues and you have not opted out of it. Any money you get from a class action may also be taken into account if you ask for compensation from the Compensation Scheme of Last Resort.

Are there any class actions happening now?

As of the time of writing, no class actions have been started. There are a few law firms that are investigating whether they can start a class action. If all the super funds agree to compensate their members, it may not make sense to start a class action. Once more information is available from ASIC’s investigations, it will be clearer whether any class actions are likely to be started.