Communications and advisory firm Portland has published its 2024 report offering new insights and tracking trends in how the UK perceives and engages with class actions, ESG and securities litigation.

Portland has polled the UK public and more than 500 senior business decision-makers based in the UK in order to compile its findings and assess the impact of these types of litigation on reputation and their role in improving corporate governance standards. The report also contains commentary from a number of senior legal experts including Stewarts’ Lorraine Lanceley.

Portland’s report

Portland reports the following top findings from its research this year:

• “Public awareness of class actions has substantially increased in the UK for the first time, but this has not translated into an increased willingness to sign-up”.
• “The public’s faith in class actions yielding positive outcomes for claimants has significantly increased, but the largest majority still believe that lawyers and litigation funders stand to benefit most”.
• “The public have a low awareness and understanding of their eligibility to claim compensation for high-profile competition claims, despite showing a high enthusiasm to participate in such claims”.
• “Senior business decision makers in the UK are highly aware of their duties to mitigate climate risks, as well as the threat of legal action from shareholders if they fail to do so”.

Lorraine Lanceley, partner in the Commercial Litigation team at Stewarts, contributed to the report, providing commentary on the role of securities litigation and its potential to improve corporate behaviour as well as the extent to which securities litigation can be used as a way of holding companies to account for broader ESG failings.

Lorraine’s contribution is reproduced in full below. The full report by Portland is available to download here.

Lorraine’s commentary

It is encouraging to see that the UK public holds a positive perception towards securities litigation and its potential to improve corporate behaviour. In particular, 64% agree that shareholders are right to sue companies for publishing misleading information and 59% believe that the increase in shareholder actions will lead to better governance.

UK investor litigation is on the rise. The number of claims issued in the English courts pursuant to Section 90 and/or Section 90A and Schedule 10A of the Financial Services and Markets Act 2000 (FSMA) has accelerated in recent years. Shareholders seem to be increasingly willing to hold companies in which they invest to account for serious governance failings by suing for compensation for stock-drop losses. This mood music is further supported by the data, as Portland reports that 50% of the UK public said they would be prepared actively to move shares from a company which was found to have breached their governance standards.

The risk of these sorts of class actions certainly appears to be on the radar of properly advised public companies and the increasing threat of private enforcement should no doubt act as a further deterrent to bad behaviour by company directors. The growth of the litigation funding market has also increased the practical viability of such large group claims (on the basis that, without funding, many of these cases may never get off the ground in the first place given the very high costs involved in bringing them). All of this put together suggests that the current securities litigation regime is well placed to deliver on the UK public’s desire to use this sort of litigation as a governance tool.

As to the evident desire by the UK public to use securities litigation as a way of holding companies to account for broader ESG failings (climate impact, diversity and inclusion, equal pay or human rights), this function exists so long as the ingredients of Section 90/90A/Schedule 10A FSMA are met. A recent example is Boohoo (originally issued in June 2024, and with an amended issue date of November 2024) which concerns the company’s failure to disclose serious labour rights violations at its suppliers’ factories. Certain ethical funds for example may be particularly incentivised to pursue claims for ESG failings.

Ultimately, securities litigation is about investor protection (whatever the backdrop) and the causes of action introduced by Section 90/90A/Schedule 10A operate as important investor protection tools. As to what extent the regime protects ordinary retail investors, it is true that the majority of claims currently working their way through the English courts are primarily brought by institutional shareholders. However, it is important not to lose sight of the fact that real people may sit behind these funds. The most obvious example is pensioners whose retirement pots are invested by major pension funds, these funds representing some of the biggest institutional investors in the UK markets.

As to the extent to which securities litigation achieves the results the UK public appear to desire as indicated by Portland’s data, the fact remains that no group securities claim has yet to reach judgment. Serco was the first case to go to trial in June earlier this year, but this settled just over a week into the hearing. Glencore and Standard Chartered are not currently listed to go to trial until Autumn 2026.

However, such paucity of final judgments should not be regarded as evidence that securities litigation is failing to deliver on its objectives. Rather, the fact is that the cases have all settled before trial and investors have been compensated (to some extent) out of court by way of confidential negotiated settlements. Therefore, the fact that investors are not having their “day in court” should hopefully not serve to dampen the UK public’s current appetite to support this type of litigation.

In terms of the current general support by the UK public for shareholder activism (with more than 53% of the UK public thinking that this is a positive thing), it is worth highlighting that as matters stand there is no formal class actions regime for securities claims in the UK. Unlike those in the US, these cases can only be brought on an “opt-in” (versus “opt out”) basis by way of a standard multi-party action. This means that investors are required directly to participate in any claims, which includes putting their name on the claim form and signing up to any funding arrangements and/or contingency agreements with lawyers and funders.

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