Banks and other financial institutions could be the first to face US-style ‘opt-out’ class actions, the chancellor confirmed this week.

During the Financial Services Bill’s second reading in parliament, Alistair Darling said that though he does not want to see ‘the widespread development’ of class actions, as in the US, ‘it is an important thing to do’.

After last month’s Supreme Court ruling in the bank charges litigation, some lawyers predict that the focus may increasingly turn towards these actions as a way to secure redress against financial institutions.

The action envisaged by the bill goes further than the Treasury had consulted on by allowing groups to appoint a representative, who could be another party with no interest in the proceedings. Originally, the Treasury had proposed giving the power to bring actions to the Financial Services Authority alone.

The bill follows many of the recommendations for a collective redress procedure made by the Civil Justice Council earlier this year, meaning the court would authorise its use and decide whether it is ‘opt-in’, which would be more restrictive, or the US-style ‘opt-out’, which would make it easier to gather a class of claimants to form the basis of an action.

The Treasury estimates that 45% of complaints to the Financial Ombudsman Service, representing around 60,000 consumers, have common characteristics, making them potentially suitable for a class action.

Andrea Monks, a dispute resolution partner at City firm Lovells, noted that while the government might struggle to get such heavyweight legislation through parliament before the election, ‘at a European level, there is also considerable momentum towards making it easier to bring group actions along US lines, and a UK government of any colour might struggle to resist it’.