The Australian Industry Group, also known as Ai Group, is calling on the Australian government to regulate litigation funders and impose limits on returns earned by plaintiff law firms and funders, as class actions are costing investment and jobs and pushing up insurance costs, it claims.

The group, an employers' organisation, says A$10 billion ($6.9 billion) in class actions have been filed in the past fiscal year, and they present "a clear and present danger to Australia's fragile economy".

"The Australian government needs to act now to rein in speculative and costly class actions before they materially damage our economy," Australian Industry Group chief executive Innes Willox said in a statement.

"Overseas litigation funding firms have moved into Australia in a big way due to the fact that class actions in Australia are subject to scant regulation, compared with other countries such as the U.S. and U.K. Overseas investors should not be permitted to make super-profits at the expense of Australian businesses and jobs."

A report on class actions and litigation funding released by the Australian Law Reform Commission earlier this year did not recommend any substantial changes to regulations governing the sector.

Willox said plaintiff firms and funders are seeking "unconscionable" returns and are using misleading and deceptive conduct to entice workers into joining some class actions.

"The growing threat of class actions adds to business risks and creates a disincentive for those considering setting up new businesses or taking on board and senior leadership positions. This has potential impacts for leadership and management capability in the long term," he added.

Ai Group called for regulation of litigation funders through the corporate regulator, the Australian Securities and Investments Commission. "Litigation funding arrangements are financial products and there is no legitimate reason why these arrangements should not be subject to regulation like other financial products," the group said.

It also wants "reasonable limits" on returns to plaintiff lawyers and litigation funders.

Litigation funders should be prohibited from exerting any control over the positions taken by, and the arguments pursued by, the lawyers in the proceedings, Ai Group said. "This is important to protect lawyers' duties to the court and their clients. A similar requirement applies in some other countries," it said.