11 January 2018

Commercial Risk Europe: Ferma and insurers on watch as the Commission paves way for more EU-wide class actions

The European risk management and insurance industries are beefing up lobbying efforts in response to the planned introduction of new European Commission rules this March that would make it easier for European consumers to bring class actions and seek compensation from companies.

The EU already has a framework in place, led by the Injuctions Directive, designed to make it easier for consumers to seek redress on a collective basis across Europe. This came through a Recommendation on Collective Redress introduced in 2013.

However, the EC and leading European consumer organisations such as The European Consumer Organisation (BEUC) are not convinced that this system really works and have convinced the EU leadership to include an update of the rules within its 2018 agenda.

On 13 September, EC President Jean-Claude Juncker announced in his Letter of Intent a “New Deal for Consumers” that opened a consultation process. Critics of the existing non-binding system – not least Vera Jourova, European Commissioner for Justice, Consumers and Gender Equality – believe the current rules are too soft and hope a tougher system will be in place by March.

The move for a more effective and consistent collective redress system across Europe has, in part, been driven by recent events, noted President Juncker when he announced the new deal for consumers.

“In response to mass-harm cases, such as the 2015 ‘Dieselgate’ scandal or the massive 2017 flights cancellation affecting hundreds of thousands of consumers across the EU [Ryanair], the Commission Work Programme 2018 under the title ‘A new Deal for Consumers’ foresees a revision of the EU consumer directives, including the Injunctions Directive (ID). The initiative is aimed at ensuring cheaper and more effective means to stop and remedy breaches harming multiple EU consumers simultaneously,” stated the EC.

Ferma has picked up on the EC’s plans to beef up its collective redress system. The federation is clearly worried about an increased risk profile for European companies if consumers are encouraged to bring class actions and the rules are more consistent across Europe.

In a recent post on its website, Ferma pointed out that 26 new initiatives were proposed in the 2018 EC work programme that was released in late October.

This is the last programme by President Junker in which real progress can be made before legislative momentum slows down ahead of the 2019 European elections and Brexit, noted Ferma.

Seven priority areas have been agreed to maintain political momentum on 31 key proposals and the aim is to adopt as much legislation as possible before the European elections in 2019, explained the federation.

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