France: keen for jurisdiction over CMCs

All consumers of legal services – using a broad definition that includes “linked professional services and advice that has a legal dimension” – should have access to the Legal Ombudsman (LeO), its chairman said today.

Launching LeO’s annual report, Elizabeth France said activating the voluntary jurisdiction provided for in the Legal Services Act 2007 would also mirror changing consumer behaviour and innovations in industry and legal services, such as alternative business structures between law firms and insurers, “which are eroding traditional boundaries between sectors”.

This could include tax and other legal advice provided by accountants, estate administration, immigration advice, paralegals, and not-for-profits like the Citizens Advice Bureau. Currently LeO can deal with any work done by a regulated entity, whether or not it is a reserved legal activity.

Where there are overlaps with other ombudsman schemes, these could be dealt with by memoranda of understanding, she said.

Ms France said the need for this was compounded by the European ADR Directive, which by spring 2015 will require all consumer transactions to be covered by an ADR scheme (although signing up to one will not be compulsory). She urged the government to use the LeO to fill gaps where appropriate rather than create a patchwork of other small redress schemes.

LeO is still waiting for the Ministry of Justice to press ahead with its plan to give it responsibility for complaints against claims management companies, which has been held up by issues raised by the Treasury over funding.

Ms France said LeO was “very keen to get on with it as quickly as possible” both to close a gap in consumer redress and because LeO has the capacity. The number of contacts and complaints continues to be lower than expected – meaning LeO’s cost per complaint is above target – and if this extra work is not taken on, she said they will have to look at ways to reduce LeO’s costs.

The number of contacts fell from 76,000 in 2011/12 to 71,000 in 2012/13, and 7,630 cases were resolved, around the same number as the year before.

Writing in the report, Chief Legal Ombudsman Adam Sampson said the reason for this is “not easy to discern”. The continuing difficulties of the housing market has depressed the number of conveyancing transactions – a common source of complaint – and he said the general economic downturn may have had a similar effect in other areas of law too.

“However, one would have thought that as general awareness of our scheme’s existence has increased, the number of complaints we would be receiving will have grown. The explanation for the reduction in contacts could simply be that lawyers are now more familiar with our expectations of them and have moved more quickly to resolve complaints before they reach us.

“If that is so – and there is some anecdotal evidence to support the hypothesis – it is very much to be welcomed. That said, there is considerable evidence that there is still a problem in persuading consumers that complaining about a legal service is possible and effective.”

Divorce (18% of resolved complaints), house buying (14%) and will writing (12%) were the three largest sources of complaints in 2012/13. Some 43% of complaints went to an ombudsman decision, far higher than had been anticipated when LeO was set up.

The report also revealed that LeO started 213 formal enforcement cases against lawyers for failing to pay remedies that had been ordered against them, and recovered £97,000 through actual or threat of legal action on behalf of customers.

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