The Federal Government says it will introduce regulations to avoid funded class actions being wrapped in corporate red tape.

Corporate Law Minister Chris Bowen last week announced a plan to introduce regulations to ensure funded class actions avoid being classified as managed investment schemes.

It follows a decision last year by the Full Federal Court that found a funded class action is a managed investment scheme within the meaning of the Corporations Act.

Mr Bowen said the ruling in Brookfield Multiplex v International Litigation Funding Partners created “serious concerns about impeding access to justice for small consumers, if access to funded class actions were to be subject to the same regulatory requirements as managed investment schemes”.

Lawyers say the ruling would have forced both ongoing and new class actions to comply with a wide range of regulatory requirements, including licensing, conduct and disclosure requirements, before they could proceed.

Last week Mr Bowen justified excluding class actions from that regime on the basis they are already subject to robust Commonwealth and state regulations, court rules and rules protecting the clients of legal practitioners.

He says the decision will avoid a heavy compliance burden and promote affordable court access for clients in addition to providing certainty for litigation funders and lawyers.

The Government will also consider introducing regulation through the Australian Securities and Investments Commission (ASIC) to manage any potential conflicts of interest.

Class action law firms have welcomed the decision, with Slater & Gordon class action expert Ken Fowlie describing it as “a huge win for common sense”.

Maurice Blackburn Chairman Bernard Murphy says the decision “restores access to justice for thousands” and will allow at least 10 stalled cases to proceed.

On Friday ASIC announced its intention to grant interim class action relief to allow time for the new policy and legislative regime to be established.