Reports that revealed funding giant Omni Bridgeway made a return on invested capital of more than 500 per cent on the Murray Goulburn class action, was countered by chief executive Andrew Saker, who said to focus on a single figure is misleading.

Mr Saker said claims there had been an “explosion” in class actions in Australia and litigation funders were making “avaricious returns” were simply false.

Former Productivity Commission commissioner Warren Mundy told Parliament he rejected suggestions a rise in the number of class actions in Australia was about raising money for “evil foreign shareholders”.

“(The) core proposition that this is about delivering justice to people is absolutely the case,” Dr Mundy said, adding it was a reflection on the growth of the economy.

“Should we be concerned about how well people do from the proceedings… the answer is absolutely yes.”

Labor and government committee members also clashed during the inquiry.

Opposition legal affairs spokesman Mark Dreyfus condemned the inquiry as a sham that aims to deny justice and fair compensation to ordinary Australians.

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“Litigation funding and class actions provide a vital path to justice for Australians trying to uphold and enforce their rights,” he said.

Meanwhile, LNP-backed think tank Menzies Research Centre spokesman James Mathias, whose submission came under scrutiny, said the regulation overseeing the industry was non-existent.

However, the opposition attacked the credibility of the report on tremendous profits from litigation funders which included misused data from Herbert Smith Freehills.

HSF clarified that the information was an overview for the purpose of a continuing legal education session rather than an empirical analysis .

"It was drawn only from public information, which in some cases can be incomplete," HSF said.

"It was not prepared for the purposes of the Parliamentary Committee’s Inquiry and was not part of HSF’s submission to the Committee.”

Stuart Clark, former managing partner international at Clayton Utz and adviser to the US Chamber Institute for Law Reform, said the class action system had “been hijacked by some well-funded litigation funders”.

King & Wood Mallesons partner Alexander Morris also suggested some class actions were comprised of individual matters which, on their own, would not be successful in court. However, it made commercial sense to settle class actions and pay $60 million to make a $1 billion claim go away.

UNSW Law professor Michael Legg said a Federal Court judge should be allowed to review, change or set fees taken by lawyers or class litigation funders from victims.

Professor Legg argued procedures and safeguards need to be in place to protect members of class actions, including ensuring that courts have adequate powers to oversee their conduct and fees charged.

Witnesses before the committee broadly agreed there was scope for some regulation of litigation financing, and most said an AFSL was not an unreasonable burden as long as it was grandfathered for existing matters.

Meanwhile ASIC, the corporate regulator, had told Parliament it does not know how a clampdown on litigation funders introduced by Treasurer Josh Frydenberg will work, less than five weeks before the changes are due to come into force.

In testimony to Parliament on Wednesday, 15 July the watchdog initially tried to walk back previous evidence that it had not been told about the litigation funder changes until the day before Mr Frydenberg announced them.

However, in the evidence to a parliamentary committee, ASIC officers revealed the regulator had just two public documents to work from in coming up with a response to Mr Frydenberg’s crackdown on litigation funding.

ASIC is also a central part of Treasurer Frydenberg’s plan for reform, along with business lobbyists who are entirely supportive of ASIC to completely supplant litigation funders.

ASIC’s interactions with the Treasurer, his office and Treasury over the sudden change are now set to be revealed after Deborah O’Neill asked the regulator to put them on the public record.