Primary legislation will be required to bring complaints against claims management companies within the remit of the Legal Ombudsman (LeO), the government has admitted for the first time.
Responding to a written question from Liberal Democrat MP Michael Crockart, justice minister Helen Grant said the aim is to shift complaints from the Claims Management Regulator (CMR) by the end of 2013.
She continued: “However, in order to ensure that the Office for Legal Complaint’s costs are recovered from the claims management companies and not the wider legal profession, primary legislation will be required.
“Until we secure a legislative vehicle we cannot commit to a specific timeline and the OLC is aware of the position.”
The intention to move CMC complaints to LeO was first announced in August 2012.
As we exclusively reported in July, LeO is undergoing a restructuring as a result of receiving fewer complaints than expected – with 10% of jobs, or 25 posts, put at risk of redundancy – but that the scale of this is greater than it would have been had CMC complaints already been moved to its jurisdiction.
The key sticking point has been how LeO’s costs can be recouped from CMCs.
The Legal Services Act 2007 makes provision for LeO’s jurisdiction to expand to include CMC complaints. However, the Legal Services Board – which has been the main stumbling block – says the Act anticipated that the CMR would, in those circumstances, become a ‘leviable body’, that is an organisation that would become subject to a levy raised by the LSB to fund LeO’s work in relation to CMC complaints, as the Law Society, Bar Council and other approved regulators already are. These costs would in turn be recouped by the CMR from CMCs.
However, the CMR remaining part of the Ministry of Justice, rather than becoming a free-standing body as apparently originally envisaged, has caused the problem; it is said to be counter to public sector finance rules for a Secretary of State to be levied by another government body. The Act also does not allow the ministry to provide LeO with grant in aid for the work.
Other than enacting primary legislation to regularise the situation, the option put forward by the Ministry of Justice would see the LSB levy each individual CMC for its share of LeO’s costs, which the LSB is unwilling to do.
Chief Ombudsman Adam Sampson, said: “We have been ready for some time to begin work on CMC complaints and give the customers of CMCs confidence that they will be protected if things go wrong. We are aware that there are currently issues between the Legal Services Board and government about how best the powers given to us under the Legal Services Act can be switched on and we are eager that these are resolved as quickly as possible so that we can get on with this vital work.”