Pandemic causes rise in consumer protection litigation and corporate misconduct

Litigation partner Gillian Dingle has spoken to Law Times about the rise in consumer-protection based litigation amid the pandemic, noting that “in past times of financial crisis, you see a rise in corporate misconduct”.

In the interview, she elaborated on the themes addressed in a Q4 Torys Quarterly article entitled “Mitigating the risks of litigation and enforcement action: strategies for financial institutions”, authored by Gillian and her colleagues John Fabello and Brigitte Goulard.

The article discusses the heightened attention that has been placed on consumer-protection litigation and regulatory activity involving financial institutions amid the COVID-19 pandemic.

Speaking to Law Times, Gillian pointed out that the Financial Consumer Agency of Canada (FCAC) has made headway in monitoring financial institutions through a larger regulatory enforcement team with a noticeable presence in the industry.

“All of those things suggest a trend towards more frequent regulatory enforcement proceedings against the financial institutions that it regulates,” Gillian said.

Gillian also touched on the increase in litigation since the beginning of the pandemic and highlighted that although claims involving breach of the legislation, negligence and breach of contract are on the rise, there is a particular increase in conflict-of-interest claim activity as a result of terminated M&A transactions.

READ: For more insight on the rise in conflict-of-interest claims, read the Q4 Torys Quarterly article “Financial advisors and contested transactions”.

Speaking on the increase in conflict-of-interest claims, Gillian noted that unless there is a fiduciary relationship, there typically isn’t a standalone claim for conflict-of-interest.

“But I think that there is a greater focus these days on conflict of interest issues. And so, counsel have been looking for ways to try and ground a claim that is really about a breach of a conflict of interest and turn it into something that can recover some damages on,” she said.

For more on our securities defence practice, view the relevant practice page.