17 April 2018

Commercial Risk Europe: Ferma calls for balance in European Commission’s collective redress proposals

Ferma is considering the implications of the Commission’s plans to introduce collective redress across the EU and higher penalties for companies that breach consumer law, before making its next move.

The federation has already reiterated its stance against punitive damages and reconfirmed its belief that out-of-court settlements are preferable for business and consumers, while reminding the commission of the need to maintain balance between offence and harm when setting new rules.

In its New Deal for Consumers package announced last week, the EC put forward plans to introduce pan-European Union collective redress and penalties of up to 4% of annual turnover for organisations that fall foul of consumer law.

The EC wants the new rules to hit the statute book by May of next year, to get the measures through before the next European elections.

Both Insurance Europe, the insurance industry body, and BusinessEurope, which represents European business associations, have come out against the EC’s proposals to introduce collective redress across the EU because they believe they do not safeguard against abuse and could add unfair costs to their members.

They are concerned that the system put forward by the EC last week fails to follow its own recommendations on collective redress published in 2013, which in part aimed to avoid US-style class actions.

The EC has dropped the loser-pays principle and the need for consumers to opt in to collective actions, which were seen by many as key safeguards in the 2013 text, from last week’s New Deal for Consumers proposals.

Ferma has not publicly joined the criticism but will no doubt share many of the same concerns. It will be keeping a close eye on proceedings before deciding how best to lobby on behalf of its risk and insurance management members.

It is worth remembering that back in 2013, Ferma welcomed the commission’s recommendation on collective redress but argued against the introduction of US-style class action legislation on the basis that it would introduce complex, lengthy and costly procedures.

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