Federal Attorney-General Christian Porter says there is a clear need for reform on class actions and he is “actively engaging” over issues raised by a Government inquiry earlier this year.

Mr Porter says he is in the process of preparing a response to each of the recommendations in the Australian Law Reform Commission report to ensure the class action regime provides just and effective outcomes.

“The report raised complex issues which will need thorough consideration and I am carefully considering each of the report’s recommendations,” Mr Porter said last week. “However, it is clear that there is a need for reform in this area.

“The emergence of overseas litigation funding in the Australian market is concerning and the class action regime needs to be free from actors seeking solely to profit from the circumstances of others.”

The Australian Industry Group (Ai Group) says conservative estimates show well over $10 billion was claimed against businesses in class actions filed last financial year.

“The recent explosion in class action claims by plaintiff law firms, typically backed by overseas litigation funders, is a clear and present danger to Australia’s fragile economy,” Ai Group CEO Innes Willox said.

“Investment and jobs are threatened and business insurance costs are going through the roof.”

Ai Group says the Government should immediately introduce legislative reforms. It has put forward seven proposals, including greater oversight of litigation funders by the Australian Securities and Investments Commission.

“Overseas litigation funding firms have moved into Australia in a big way due to the fact that class actions in Australia are subject to scant regulation, compared with other countries such as the US and UK,” Mr Willox said.

“Regulation cannot be left to the courts. Litigation funding arrangements are financial products, and these arrangements need to be regulated like other financial products.”

Other proposals include exposing lawyers and funders to adverse costs orders for unsuccessful actions and increasing the number of minimum plaintiffs for a case to be started.

Litigation funders should also be prohibited from exerting any control over the positions taken and the arguments pursued by lawyers in proceedings, Ai Group says.