As the growing tide of anger towards Australia’s misbehaving banking sector crystallises into shareholder unrest and even legal action, big business should buckle down – they ain’t seen nothing yet.
Several high profile class actions announced this week on behalf of “ripped off” customers is a reflection of widespread corporate wrongdoing, class action spokesman at law firm, Maurice Blackburn Lawyers, Cameron Scott told Yahoo Finance.
And it’s only the beginning. Since the start of the week, law firm Slater and Gordon has expressed an interest in pursuing the Commonwealth Bank and AMP over superannuation rip-offs, while Maurice Blackburn is set to launch a shareholder class action against Woolworths over its shock 2015 profit downgrade.
This morning, Maurice Blackburn principle, Josh Mennen also told the Australian Broadcasting Commission that Westpac could also be exposed to potential class actions over flawed lending policies.
“It is early days in relation to any class action, but I don’t think anyone who has been following this could seriously rule out the possibility of a class action being brought,” Mennen said.
To Scott, the touted class actions highlight the importance of this legal remedy.
“Where there is mass wrongdoing, such as corporate misconduct that affects the financial wellbeing of thousands of Australians, there must be a check and balance on that conduct, and a remedy available to those affected. Class actions help people pursue that in circumstances where they otherwise couldn’t,” he said.
“Given that less than half of one per cent of ASX listed companies are subjected to a shareholder class action in any given year, evidence would suggest the focus really needs to be on addressing the wrongdoing, rather than the legal actions that follow the event.”
Continuing, he said interest in class actions is part of the fallout from the Royal Commission into the financial services and banking sector.
As of July this year, there were five potential class actions against AMP over its wealth management business.
“If there is more interest in events now as a result of the Royal Commission, it simply indicates that more wrongdoing is being exposed and similarly to the wrongdoing that was highlighted during the global financial crisis, there is a community-wide benefit in it being flushed out,” Scott said.
According to a 2017 report by Allens Law Firm, of the 50 shareholder class actions commenced since 1999, only two have actually been the subject of a full trial, with none proceeding to a final judgment.
It also noted a “marked increase” in the number of shareholder class actions commenced since 2013, jumping from around three a year to between five and seven, and predicted a continued increase.