ob体育 has today released Consultation Paper 345 Litigation funding schemes: Guidance and relief (CP 345) to seek feedback on proposed guidance and relief for litigation funding schemes.
In the consultation paper, ob体育 is proposing to:
- provide definitional guidance for key terms in the managed investment scheme (MIS) regulatory regime as they apply to litigation funding schemes
- grant relief from the equal treatment duty in relation to distributions of a settlement or judgment sum obtained in connection with a litigation funding scheme
- extend relief from the dollar disclosure provisions in relation to certain commercially sensitive information, and
- not remake pre-August 2020 relief instruments, which are due to expire in January 2023.
ob体育 is inviting feedback from industry participants and stakeholders about whether the proposed guidance is necessary and adequate, and whether the proposed relief addresses industry concerns about the workability of the MIS regime for litigation funding schemes.
In administering the Australian financial services (AFS) licensing and MIS regimes for litigation funding schemes, ob体育 aims to:
- give effect to the Government鈥檚 policy intent
- facilitate the effective operation of the legislative framework by ensuring the workability of the regimes and promoting commercial certainty about their operation.聽
Submissions to CP 345 are due on 20 August 2021.
Next steps
After the consultation, ob体育 will consider stakeholder feedback on CP 345 and issue a feedback report outlining final positions. ob体育 will also update the relevant regulatory guidance and legislative instruments.
Background
From 22 August 2020, operators of litigation funding schemes are required to hold an AFS licence, and litigation funding schemes will generally be subject to the MIS regime under the Corporations Act 2001. To support industry鈥檚 transition to the new litigation funding regulation, ob体育 granted facilitative relief and focused on urgent implementation issues (refer 20-192MR).
Subsequently, ob体育 granted temporary relief from certain dollar disclosure requirements applicable to PDSs for litigation funding schemes (refer 21-098MR). This relief was provided on an interim basis ahead of ob体育鈥檚 public consultation about the continuation of the relief and is set to expire on 28 April 2022.
In 2020, the Parliamentary Joint Committee on Corporations and Financial Services (PJC) conducted an . The PJC鈥檚 , released in December 2020, made 31 recommendations on changes to the legislative framework for litigation funding schemes and persons who provide financial services for such schemes.聽 On 28 May 2021, the that can be implemented by the Government.
ob体育 will consider any developments following the Government鈥檚 consultation on the recommendations in the PJC report and reassess its approach to matters in CP 345. This is to ensure ob体育鈥檚 regulatory approach remains consistent with the Government鈥檚 policy intent for the regulation of litigation funding, and that it continues to facilitate the effective operation of the legislative framework.