Improving access to law for consumers through collective redress?

The European Commission has been working on a collective redress instrument at European level: in mass claim cases the harm for the individual consumer can be low and consequently disproportionate to the costs of pursuing the claim, while the aggregated amount of the damage can be high for the size of the market and add up to a considerable amount for the defendant. Therefore, the European Commission believes that creating a tool that empowers consumers in mass claim cases to enforce their rights collectively and make traders accountable for their behaviour would enhance the confidence of consumers in the Internal Market, be a stimulus for sound trader’s performance and, ultimately, increase cross-border activities.

For legal protection insurers the central question has always been how to improve access to law and justice for the insured person. For this reason, RIAD welcomes any measure to make redress more effective but does not share the Commission’s viewpoint that it is the lack of a European framework for a collective redress scheme which deters consumers. On the contrary, the introduction of a European instrument of collective redress would neither remove any of the existing obstacles for consumers like lack of awareness or motivation of consumers or language barriers nor would it increase the effectiveness of redress. A priority should therefore be to ensure that existing legal and other instruments (e.g. mediation or the small claims procedure) at national levels are interpreted and employed in a way which allows consumers to pursue their legitimate claims within their country and abroad. To this end, the possibility to employ and extend existing networks like the ECC-NET and the FIN-NET should be fully exploited prior to creating new schemes which are not certain to function properly.

Moreover, legal protection insurers strongly reject any instrument that operates on an opt-out basis as it would render the calculation of premiums for legal protection insurers very difficult. Please note that in contrast to an opt-in system where claimants only join the action if they consciously decide to do so, an opt-out system means that anybody who has been harmed by the same or a similar illegal practice of a trader would automatically become part of the action, regardless whether they make a conscious choice to join or not. Another question is of course whether such a system would be constitutional in most of EU Member States.

RIAD on the follow-up of the Green Paper on Consumer Collective Redress
RIAD on the Green Paper on Consumer Collective Redress
RIAD on the White Paper on Damages Actions for Breach of the EC Antitrust Rules
RIAD Position on Collective Redress in the EU