The Finance & Leasing Association has called for commercial litigation funders to be brought within the scope of FCA regulation as part of efforts to strengthen consumer protection.

The trade body welcomed proposals from the Solicitors Regulation Authority to strengthen protections around third-party litigation funding but argued that regulating solicitors alone would not address wider risks within the market.

It said a consistent regulatory framework was needed to promote good practice, improve transparency and ensure consumers understood how litigation funding arrangements worked.

FCA OVERSIGHT

In its response to the SRA consultation, the FLA called for stronger professional conduct requirements for solicitors involved in litigation funding.

However, it also wants commercial third-party litigation funders themselves to come under FCA regulation, with anti-money laundering supervision proposed as a starting point.

The FLA said greater transparency and disclosure requirements were also needed to ensure consumers understood the arrangements they were entering into.

REGULATORS URGED TO COORDINATE

The association also called for closer coordination between the SRA, FCA, Information Commissioner’s Office and Ministry of Justice.

It said this would help create a more consistent regulatory approach across the wider claims ecosystem and address risks that would remain if reforms focused solely on the conduct of solicitors.