Law Society warns LeO away from taking on complaints against unregulated providers

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2 March 2015

The Law Society

The Law Society: LeO continuing to “experience upheaval”

The Law Society has told the Legal Ombudsman (LeO) that solicitors’ practising certificate fees should not be used for ‘thought leadership’ exercises that extend beyond legal services.

The society said LeO should concentrate on “getting the basics right”, rather than attempting to establish a voluntary jurisdiction over unregulated services.

The society urged LeO to ensure that standards are maintained, while it continued to “experience upheaval in terms of changes to established senior staff and board members, staff restructuring, changes in facilities and IT, and new jurisdictions covering claims management companies and some accountants”.

Responding to a consultation on the Legal Ombudsman’s draft strategy and budget for 2015-17, the society said: “We understand that LeO wishes to reduce its unit cost. However, this should not be to the detriment of consumers or the legal profession.

“The establishment of a voluntary scheme may erroneously lead consumers to believe that they are receiving services from a regulated provider and create false expectations. Decisions made by LeO under a voluntary scheme would not be legally binding and providers would be less likely to be insured.

“This would be damaging to complainants, as well as damaging to the reputation and credibility of LeO and the legal profession as a whole. It would leave LeO in the position of giving legitimacy to firms that it knows perform badly.

“If LeO is to undertake further work scoping out prospective jurisdictions, the funds used to do this should not be from the profession and the society would be very concerned if it were to learn that this was the case.”

The society said it did not agree in full with LeO’s definition of its purpose in the draft budget.

“LeO’s primary purpose is to deal with complaints about providers of reserved legal activities – this should be reflected in the drafting,”

The society said it was not “appropriate” for LeO to engage in “thought leadership activity” when this was moving away from its primary purpose as a complaints handler for legal and claims management services.

Chancery Lane called for a “bedding down” period following the extension of its scope to claims management companies.

“The society agrees that it is appropriate to ring-fence the funding of new jurisdictions from the core jurisdiction and apportion shared costs. Under no circumstances should solicitors be subsidising complaints handling for claims management companies.”

On contrast, in its response to LeO’s draft strategy and budget, the Legal Service Consumer Panel said the growth of the unregulated sector made establishing a voluntary scheme “even more urgent”.

The panel went on: “The latest commitment to doing this lacks the specificity and urgency needed to realise our shared vision of a single redress scheme across legal services.

“Regrettably, in the absence of a voluntary scheme, from July 2015, we will need to encourage unregulated providers to subscribe to recognised schemes that already exist so that consumers have a vehicle for redress.”

The consumer panel added that one of LeO’s priorities should be “a continued and strengthened research and policy capability”.

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