Davies: Essential service
The Legal Ombudsman (LeO) has decided against introducing a ‘polluter pays’ principle to penalise firms which repeatedly fail to deal with complaints properly – but wants to increase the case fee by 50%.
The increase in the case fee from £400 to £600 – payable when a complaint is upheld and LeO determines that the service provider did not take reasonable steps to resolve it before it reached the service – would be the first since it was established in 2010.
If it goes ahead, it will take effect for all complaints received from 1 April 2026.
It represents an inflation-only rise, a consultation issued yesterday said, after a suggestion in LeO’s draft 2025/26 business plan to double it to £800 came in for criticism as too large a jump.
The consultation also proposes introducing a review of the case fee every five years.
LeO is mainly funded by a levy on all regulated lawyers; case fee income was £945,600 in 2024/25 and covered just over 5% of its operating costs. To illustrate the impact of increasing it, in the current year this would rise to 8%.
Of the 8,270 cases LeO resolved in 2024/25, 49% went through the early resolution process and so did not attract a case fee. The rest were investigated and a case fee was charged in 56% of them.
In each of the last three years, an average of around 1,180 service providers were charged 2,200 case fees between them. The majority (70%) were only charged once but a small number received more than 10 a year, generally firms operating in volume areas.
The consultation argued that failure to keep up with inflation meant the case fee has “lost much of the intended impact that it had when it was first introduced”.
This was in part to incentivise lawyers to handle complaints properly – by costing more than having a good in-house process – and mean that those who did not bore a greater share of the cost of running LeO.
As well as increasing the fee to £800, the draft business plan sought views on adopting a tiered structure – charging a standard £800 case fee but increasing that to £1,000 for cases that could only be resolved by way of ombudsman determination, so as to encourage settlements – or introducing a ‘polluter pays’ principle where the case fee would increase to £1,000 after the provider exceeded a specified number of upheld cases.
Though the feedback showed a general level of support for reviewing the level of the case fee, there were concerns that the various options could have a detrimental impact on providers operating in markets with tight margins or where access to funding was limited – and possibly drive negative behaviours to stop a complaint being referred to LeO.
The Office for Legal Complaints (OLC), the body that oversees LeO, said that, whilst it could still see the benefits of the ideas it put forward, it had “reflected seriously” on the comments and decided not to pursue either the tiered approach or the polluter pays principle.
“The OLC can see that a higher case fee provides a greater incentive to deliver a quality first tier complaint investigation and could have a positive impact on the reduction of the levy contribution.
“However, a lower increase, that reflects in real terms how the value of £400 has increased over time, delivers some of the aforementioned positive impacts but at the same time mitigates the risk of an adverse financial impact on service providers, whilst putting the Legal Ombudsman and the profession in the same position that it was when it opened in 2010.”
OLC chair Elisabeth Davies said: “At the heart of the Legal Ombudsman scheme is a commitment to fairness, independence, and accountability – values that underpin public confidence in legal services.
“For many consumers, knowing that there is an impartial body they can turn to if something goes wrong is not just reassuring – it’s essential.
“A change to the case fee is not just about updating a number; it’s about ensuring the scheme continues to deliver independent, high-quality redress in a way that is fair to both consumers and providers.”
Leave a Comment