A wave of landmark decisions from the Competition Appeal Tribunal and the appellate courts is reshaping the economics of third-party litigation funding in the UK — tightening the conditions for opt-out certification, scrutinising funder returns, and forcing a structural rethink of how competition class actions are financed.
By Ashdown Litigation Partners Research Team | Litigation Funding Analysis 23 March 2026
The Competition Appeal Tribunal (CAT) is a specialist judicial body that hears competition and economic regulatory cases in the UK. Since 2015, when the Consumer Rights Act introduced an opt-out collective proceedings regime, the CAT has become the principal venue for large-scale class actions in the country, almost all of which depend on third-party litigation funding (TPLF). The combination of high-value claims, novel legal arguments, and the involvement of some of the world’s largest corporations has transformed the CAT into the engine room of UK collective redress. The period since 2023 has been one of exceptional turbulence — for the funding structures that underpin these claims and for the certification standards that determine whether they proceed at all.
The regime is moving from rapid expansion to disciplined consolidation — and the funders who thrive will be those who can select and underwrite claims with greater rigour.
Background: The PACCAR Disruption and Its Resolution
The foundational disruption to UK litigation funding came in July 2023, when the Supreme Court delivered its landmark judgment in PACCAR, overturning decisions of the CAT and the Divisional Court. The Supreme Court held that third-party litigation funding agreements (LFAs) — where the funder’s fee is calculated as a percentage of damages recovered — are damages-based agreements (DBAs) under section 58AA(3) of the Courts and Legal Services Act 1990. Since DBAs must comply with strict statutory conditions to be enforceable, the ruling rendered a large number of existing LFAs vulnerable to invalidity. Funders and funded claimants scrambled to renegotiate agreements and restructure their arrangements.
The CAT pushed back robustly. In four separate collective proceedings, defendant companies argued that the post-PACCAR revised LFAs remained DBAs. The CAT rejected each challenge and found the revised agreements enforceable. On 4 July 2025, the Court of Appeal confirmed this position in Sony Interactive Entertainment Europe Ltd v Alex Neill Class Representative Ltd, holding that LFAs which calculate the funder’s fee as a multiple of its outlay — even if capped by reference to the damages awarded — are not DBAs. Lord Justice Flaux observed that the contrary argument would lead to an “absurd result” rendering third-party funding practically impossible. The Supreme Court has since refused permission to appeal, drawing a line under the structural question for multiples-based agreements
Key Decisions: From Certification to the Merits
The period since 2024 has produced a cluster of decisions that, taken together, represent a fundamental recalibration of the regime. The CAT has delivered its first substantive merits judgment, the Supreme Court has raised the bar for opt-out certification, and the tribunal has, for the first time, struck out a claim entirely at the certification stage on costs-and-benefits grounds
Claims Summary
|
Case |
Defendant(s) |
Basis of Claim |
Outcome / Status |
|
Le Patourel v BT (Dec 2024) |
BT Group plc |
Excessive and unfair pricing of Standalone Fixed Voice services, contrary to Chapter II of the Competition Act 1998. Opt-out class action on behalf of up to 3.8 million residential customers; aggregate damages claimed exceeded £1 billion. |
Claim dismissed on the merits. CAT’s first substantive merits judgment; found pricing excessive but not unfair under competition law. |
|
Evans v Barclays & Others (Dec 2025) |
Six major banks (including Barclays, Citigroup, JPMorgan, Royal Bank of Scotland, UBS, and others) alleged to have colluded in the foreign exchange (FX) spot market |
Cartel coordination in the FX spot market, contrary to Article 101 TFEU and/or Chapter I of the Competition Act 1998, causes overcharges to corporate and institutional customers transacting in sterling and euros. |
Opt-out certification refused. Supreme Court reinstated CAT’s original refusal, confirming no presumption in favour of opt-out proceedings and that merits are relevant at certification. |
|
Rowntree v PRS (2025) |
PRS for Music (the Performing Right Society), the UK’s collecting society for music copyright licensing |
Alleged abuse of dominant position by PRS for Music in setting licensing terms and royalty rates for music users, contrary to Chapter II of the Competition Act 1998. |
Claim struck out entirely at certification. First instance of the CAT refusing certification on costs-and-benefits grounds, finding the funder and legal advisers would be the primary beneficiaries. |
|
Roberts v Water Companies (Mar 2025) |
Six water and sewerage companies (including Thames Water, Severn Trent, United Utilities, Anglian Water, Southern Water, and Yorkshire Water) |
Environmental competition class action alleging abuse of dominant position in the supply of water and sewerage services, resulting in harm to customers through excessive charges and inadequate service. Claims found excluded by s.18(8) of the Water Industry Act 1991. |
Certification refused. CAT held the bespoke water industry regulatory framework excludes competition law claims. First environmental CAT class action to reach certification. |
|
Gutmann v Rail Companies (2025) |
Multiple train operating companies including Stagecoach South Western Trains and others party to the Travelcard Agreement |
Collective proceedings alleging anti-competitive coordination in the setting of rail fares, resulting in overcharges to passengers purchasing Travelcard and other rail products under Chapter I of the Competition Act 1998 / Article 101 TFEU. |
Judgment delivered. Settled with Stagecoach South Western Trains. The remaining defendants proceeded to trial. CAT found that train companies did not receive additional revenue from the alleged overcharging, given the Travelcard revenue distribution structure. |
Key cases and their significance:
— Le Patourel v BT (December 2024): The CAT’s first-ever substantive merits judgment found in BT’s favour, ruling that BT’s pricing of Standalone Fixed Voice services, while excessive, was not unfair under competition law. The claim had been brought on behalf of up to 3.8 million claimants with aggregate damages exceeding £1 billion. The ruling is a stark reminder that a low certification bar does not translate into an easy merits victory — and that funders can lose everything at trial even in large, well-resourced claims.
— Evans v Barclays and Others (FX, December 2025): The Supreme Court overturned the Court of Appeal and reinstated the CAT’s original decision to deny opt-out certification for the FX class action against six banks. The Supreme Court confirmed that decision-makers must adopt a neutral stance — with no presumption in favour of opt-out proceedings — and that the merits of a claim are a relevant and important factor at certification. Opt-out certification should not serve as an alternative route where opt-in proceedings fail to generate sufficient interest from potential class members.
— Rowntree v PRS (2025): The first time a claim has been struck out entirely at the certification stage. The CAT refused certification on costs-and-benefits grounds, finding that the funder and legal advisors — not the class — would be the principal beneficiaries of any recovery. Linklaters observes that this may signal a swinging of the pendulum under the CAT’s new leadership, contrasting with the previously permissive approach to certification.
— Roberts v Water Companies (March 2025): The CAT refused to certify the first environmental competition class action, brought against six water and sewerage companies, finding the claims excluded by section 18(8) of the Water Industry Act 1991. The judgment signals a distinct category of risk for funders backing claims in heavily regulated sectors: where a bespoke regulatory framework already provides for customer redress, competition law may simply not apply.
— Gutmann v Rail Companies (2025): The CAT delivered its judgment in the rail fares collective proceedings, with a notable finding that the defendant train companies did not actually receive additional revenue from the alleged overcharging, given the structure of Travelcard revenue distribution. A second collective settlement was approved with Stagecoach South Western Trains, while claims against the remaining defendants proceeded to trial.
The Legislative Response and the Funding Outlook
The Civil Justice Council (CJC) published its long-awaited final report in June 2025, recommending that Parliament reverse PACCAR through legislation and introduce a light-touch regulatory framework for funders. On 17 December 2025, the Government accepted both primary recommendations, but confirmed that the legislation will apply prospectively, not retrospectively, and will be introduced when parliamentary time allows. The Department for Business and Trade has also launched a parallel consultation on the opt-out collective proceedings regime itself, with the outcome not expected before 2027. The funding environment therefore remains materially uncertain for existing agreements, even as the structural direction of travel has become clearer.
The appointment of Mrs Justice Bacon as the CAT’s new President in May 2025 has already produced a noticeably more rigorous procedural posture. The Tribunal is exercising tighter case management from the outset and is scrutinising funding arrangements — including the proportion of any recovery flowing to funders relative to class members — with greater care than before. The Merricks v Mastercard settlement dispute, in which the litigation funder initiated legal proceedings against the class representative and his solicitors following dissatisfaction with the settlement figure, illustrated publicly the tensions that can arise when the funder’s and the class’s interests diverge.
Conclusion
The CAT’s collective proceedings regime is maturing, and the direction of travel is towards greater rigour at every stage — from certification, through trial, to the distribution of any recovery. For third-party litigation funders, this represents a structural shift rather than a temporary correction. Multiples-based funding structures have been confirmed as lawful, and prospective legislation to reverse PACCAR will restore a measure of certainty. But tighter certification standards, the demonstrated possibility of total merits failure in large funded claims, new judicial scrutiny of funder economics, and ongoing regulatory uncertainty together demand a higher standard of case selection and underwriting. The funders best placed to navigate this environment will be those who treat rigorous independent analysis — not volume — as their primary competitive advantage.
ABOUT THE AUTHOR
This briefing was prepared by the Research Team at Ashdown Litigation Partners. ALP specialises in analysing and evaluating litigation funding opportunities across competition law, commercial disputes, and regulatory claims. ALP is not a regulated entity and does not provide legal or financial advice.
DISCLAIMER
This article has been prepared by Ashdown Litigation Partners Ltd for general information and marketing purposes only. It does not constitute legal, financial, or investment advice and should not be relied upon as such. Ashdown Litigation Partners Ltd is not a regulated entity and does not offer regulated products or services. Registered in England & Wales, No. 16015628. Registered office: 71 St James’s Drive, London SW17 7RW.
