Litigation lenders are now required to hold an Australian financial services licence from Saturday 22 August 2020 under the Corporations Amendment (Litigation Funding) Regulations 2020.
Litigation funding schemes will also generally be subject to the managed investment scheme regime in Chapter 5C of the Corporations Act from that date.
To assist in the transition to the new regime, the Australian Securities and Investments Commission (ASIC) has issued an instrument to provide some assistance for litigation funding schemes, which includes relief from:
- the obligation to give a Product Disclosure Statement (PDS) to ‘passive’ members of open litigation funding schemes – on the condition the PDS is available on the scheme operator’s website and referred to in advertising material
- the obligation to regularly value scheme property
- the statutory withdrawal procedures for members who withdraw from a class action under court rules
- the requirement to disclose detailed fees and costs information and information about labour standards or environmental, social or ethical considerations.
More information is available from ASIC.