Financial Services and Markets Bill [HL]

Lord Carlile of Berriew Excerpts

Committee stage
Monday 6th July 2026 Grand Committee

This would be a practical way forward. It is possible that an even faster way forward or a stepping stone might be to make litigation funding a designated activity, but this issue cannot be left resolved. I beg to move.

[Lord Carlile of Berriew (CB)]

My Lords, Amendment 172B is in my name. I declare two interests. First, I was formerly, for several years, a part-time chair of the Competition Appeal Tribunal, which hears most collective actions; I heard several collective actions there. Secondly, in my professional life, I accepted membership of consultative panels in relation to two current collective actions in which litigation funding agreements are in place. As an aside, I can offer noble Lords a third, fascinating interest. If they are really bored between football matches, they can read my article on this subject in the Law Society Gazette of 30 June. I know that, as a distinguished lawyer, the noble Lord, Lord Holmes, will read it with fascination.

The points raised by the noble Baroness, Lady Bowles, and the points raised in my amendment are mutually exclusive. I am going to talk mainly about the PACCAR case, to which she referred. I do not disagree with her that there may be scope for further regulation, but I disagree with her on two points. First, paragraph (d) of proposed new subsection (2) and proposed new subsection (3), which would be inserted by the noble Baroness’s Amendment 142D, would give the Treasury the opportunity to fix the fees that are charged by litigation funders in litigation funding agreements. One has to bear in mind that that would potentially raise a massive conflict of interest because some of these collective actions are being, have been or will be brought against the Government. The idea that the Government could impose a low fee—indeed, too low a fee—to try to kill off one of those actions is not something that I would expect, but it is implicit in the noble Baroness’s amendment.

I turn to my Amendment 172B. I was in this Room on 29 April 2024 when Committee on the Litigation Funding Agreements (Enforceability) Bill was heard in its entirety in one day. I have that Bill in front of me. It is not a long Bill; in fact, it runs to a single page. The idea of that Bill was to reverse the decision of the Supreme Court in the case called PACCAR, which had damaged the working of litigation funding agreements. Second Reading had occurred only two weeks earlier, on 15 April 2024, and I hope I will be forgiven for referring to the excellent speech made in it by the noble and learned Lord, Lord Stewart of Dirleton, who was the Minister in charge of the Bill. Before I get to that speech, I remind your Lordships that, by the time we finished Committee, all parts of your Lordships’ House agreed that that Bill should become law, but it did not, because it was not dealt with in wash-up, probably because it had not reached Report, even though that stage would probably have gone through in a shorter time than Report on your Lordships’ House on the National Security (State Threats) Bill in which I was involved a few days ago.

It is my belief that the change in the litigation funding agreements Bill has waited for far too long. I believe we will find that the Government are not opposed to it. I do not expect to hear that from the Minister, because it may be more to do with the Ministry of Justice, but my belief is that the Government will try to find an opportunity soon to push a separate Bill through.

However, it is a bit puzzling. I tried to table as an amendment to this Bill the page that I have just held out, slightly altered to fit into the Bill. I had a fascinating discussion with helpful officials in the Public Bill Office about scope. I was told that putting in that page was out of scope but that tabling my Amendment 172B, which calls for a review of litigation funding agreements, was in scope. I find that difficult to reconcile. I think it is a circular argument. If Amendment 172B is in scope, then I cannot understand why my one-pager is not, but there we are. If a decision has been made that something is not in scope, it is difficult to challenge it. I believe that has only ever been done successfully once in the hundreds of years of existence of this Parliament. So, brave as I am sometimes in legal matters, I thought I would give that one a miss and try a different route.

I remind your Lordships of the importance of this. As the noble and learned Lord, Lord Stewart, said on 15 April 2024, the Supreme Court ruling in the case of PACCAR

“rendered many third-party litigation funding agreements … unenforceable by bringing them into scope of the regulatory regime for damages-based agreements, or DBAs”.

The result was that third-party litigation looked as though it might lose much of its important role in litigation in this country. When I was a baby barrister doing personal injury cases, small contract cases and so on, I used to do masses of small claims for which legal aid was given, and every month I received a cheque—yes, a cheque, a piece of paper—from the Legal Aid Board, with 10% deducted because it was publicly-funded work, and all those actions were paid for by legal aid. Now, in reality, none of them are paid for by legal aid, so litigation funding agreements are here to replace legal aid.

As the noble and learned Lord, Lord Stewart, said:

“The restoration of the previous funding position is needed urgently to reduce uncertainty for both the future of litigation funding and for”


litigation funding agreements

“that had been entered into previously. By rendering many”

of them unenforceable, the PACCAR judgment

“risks undesirable satellite litigation, an increased burden on the courts, and creating an unfavourable market for litigation funding, which, in turn, threatens access to justice”.

As he added:

“Third-party litigation funding plays a key role in enabling ordinary people and small and medium-sized enterprises to bring large, costly claims against better-resourced companies and institutions”.—[Official Report, 15/4/24; col. 798.]