MPs probe OLC chair-in-waiting, as CMC complaints impasse finally broken

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11 December 2013


Lord Chancellor: new powers to charge CMCs complaints fees

The Legal Ombudsman (LeO) should swap the telephone for the internet as the main way it deals with the public and in doing so reflect the market it serves, according to the man likely to become chair of its oversight body, the Office for Legal Complaints (OLC).

Meanwhile, referring to the costs of the previous complaints regime as a benchmark of LeO’s success was no longer appropriate, said Stephen Green, the Legal Services Board’s (LSB) preferred candidate to be the new head of the OLC.

Separately, LeO will at last handle complaints about claims management companies (CMC) after the government finally reached a legislative formula that overcame the problems that have dogged the transfer of responsibility for complaints from the Claims Management Regulator (CMR) unit within the Ministry of Justice.

Mr Green moved a step closer to replacing Elizabeth France as the OLC chair yesterday after facing a parliamentary pre-appointment hearing. Mr Green, an LSB board member and former police chief constable, was grilled by the justice select committee for 40 minutes.

He admitted it was “a risk” that he would be viewed by the frontline regulators as “the LSB’s man”, but said his knowledge of which “buttons to push and levers to pull” at the LSB could be a benefit, and insisted that to “behave independently” came naturally to him.

Mr Green listed the establishment of LeO among his proudest achievements at the LSB. He described the regulatory maze as “incredibly confusing” to consumers, although for the time being it was likely to remain a fact of the complaints landscape. He said “clear central government guidance” on how it might be rationalised was “desperately required”.

He praised LeO for its impressive “responsiveness and ability to deal with cases in a timely manner”, but agreed with the Legal Services Consumer Panel’s recent verdict that the cost per case was too high.

Meanwhile, LeO’s “narrative” of being “better and cheaper than what went before” – a fact cited to fend off criticism of case costs at LeO’s budget launch last week – was no longer appropriate, he said.

He continued: “Now I think the memories of what went before are increasingly fading and I certainly believe I would want to be able to say… we now need to be seen as best in class and need to understand what that means and chart a course towards achieving that.”

A better use of technology was one way of tackling cost, he said, pointing to the fact that LeO used telephone and post as its “predominant way of interfacing” with complainants. “In these modern days it must be possible to have more web-based transactions, so people can interface with [LeO] on the internet if they prefer it that way.

“I think there are significant opportunities to be able to improve [LeO’s] efficiency by using IT in a bit more smart way in a way that reflects, I think, the modern consumer market.”

Mr Green said he supported extending LeO’s voluntary jurisdiction, but cautioned that “if it’s a voluntary scheme, people have to volunteer” so it had to be attractive to unregulated providers.

He said: “I think that the OLC and LeO need to develop a proposition that they can put to the unregulated legal services to demonstrate the economic and business benefits of having access to redress from [LeO] and then test that to destruction.”

The transfer of complaints about CMCs came in a last-minute House of Lords amendment to the Financial Services (Banking Reform) Bill – which had the backing of the former consumer panel chair Baroness Dianne Hayter.

It dealt with problems associated with charging CMCs to pay towards the OLC’s costs, based on the fact the CMR unit is within the MoJ, and the Lord Chancellor cannot be levied. For the government, the deputy chief whip, Lord Newby, explained that the Legal Services Act 2007 would be amended “to give the Lord Chancellor a new power to make regulations to allow him… to charge a periodic fee on regulated CMCs”.

Further, to address “cross-subsidisation”, amendments were needed to change the levy mechanism in the 2007 Act “to ensure that the calculation of the OLC’s expenditure which is leviable on the legal profession excludes both its costs and its income in relation to CMCs”, he said.

Justice minister Shailesh Vara said: “Consumers should be in no doubt that the bad companies out there are being dealt with. We have already ended the licenses of more than 1,000 companies and tough new powers are now being brought in across the board. This latest change will make sure people who get a bad service can get redress.”

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