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New class action legislation and the Australian Farmers' Fighting Fund

The Federal Government has introduced new laws which will require class action litigation to be managed and regulated as financial products.

The government claims the change is justified because the litigation funders who finance these legal claims actions – on the basis that they receive 25% - 30% commission on any win — are very often ‘fly by night’ operators based overseas, who reap huge profit while bearing little risk and do not properly inform the class members of the risk they face in joining these proceedings.

Unfortunately, one unforeseen consequence of this change is the AFFF will be required to obtain a financial services license, and any class actions it supports will need to be registered with ASIC as managed investment schemes.

This is a frustrating development.

As an exclusively Australian, not-for-profit charitable trust, the AFFF is solely driven and legally bound to act only in the best interest of Australian farmers. It has no profit motive and will now have to spend time and money — which should be spent representing the interests of Australian farmers — on legal fees and managing red tape intended to control risk in financial markets. In short, the AFFF does not run the sort of operation which the changes are meant to regulate, but those changes will frustrate the AFFF’s capacity to support Australian farming.

The AFFF have approached the Treasurer about granting the AFFF an exemption to this process. Discussions are ongoing.