Data from 2021 shows the banking and financial sector was the third-biggest target for new class action filings (down to 17 per cent from 32 per cent in 2020), after more than 10 years of managing heightened risk due to the fallout of the global financial crisis and a royal commission. The government sector was the biggest target, with 21 per cent of filings up from 13 per cent in 2020, with a broad range of claims filed against state and federal governments in 2021.

Allens partner and co-author of the report Jenny Campbell said that this was an interesting development, after the banking sector was in the class actions spotlight for so long.

“We’re seeing class action risk change, including a distinct change in class action claim targets. The number of filings against the banking and financial sector is tailing off after a long period in the spotlight, with the government and healthcare sectors now facing the most claims in 2021,” she said.

“It’s an interesting shift, and appears to feed into a broader trend showing a growing range of types of claims across the class action landscape.”

Overall, class action claims were down 13 per cent over the course of 2021, but the “short to medium term trend is for markedly increased filings compared to five years ago”, according to the report.  

Consumer claims were the most common type of claim at 23 per cent, while shareholder claims – once the most common – have fallen to their lowest levels in a decade at 15 per cent.

Allens partner and co-author of the report Belinda Thompson added that underscoring these shifts is a growing environment of uncertainty for litigation funding. Moreover, against a backdrop of recent reforms impacting litigation funders, the federal government took steps to further increase the regulation of the Australian funding market.

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“Two words describe the litigation funding environment over the last couple of years – reform and uncertainty. The impact of this is seen in the marked decline in the level of shareholder claims and directly funded claims over the last two years,” she said.  

“That uncertainty lingers with the recent class action funding bill before the Federal Parliament, which we expect will not be resolved until after the election.”

For the year ahead, the report predicts consumer claims to dominate further, giving rise to new and emerging issues in a broader range of consumer-facing sectors. Claims relating to climate change and privacy and data breaches are also areas to watch over the next year.