The Legal Ombudsman (LeO) has won approval for changes to its rules that bring them more in line with the Financial Ombudsman Service (FOS) and so equip it better to deal with alternative business structures (ABS) like Co-operative Legal Services.
As first revealed on Legal Futures in November, LeO proposed a series of changes to its scheme rules, and these have now received parliamentary approval to take effect from 1 February.
They include allowing complaints from prospective clients, raising the compensation limit from £30,000 to £50,000 (FOS’s limit is £150,000), and increasing the time limits for accepting a complaint from a year to six years from the date of act/omission or three years from the date the complainant should reasonably have known there were grounds for complaint.
LeO has also decided to drop the two ‘free’ cases that lawyers are allowed each year without having to pay the case fee.
Chief Legal Ombudsman Adam Sampson said: “At the heart of what we are proposing is a desire to future proof against changes in both the legal market and our jurisdiction.”
He told Legal Futures that harmonisation with FOS’s rules was the key element of the thinking behind the reforms – the nature of some ABS applicants meant “there is a very strong crossover between the provision of legal services and of financial services”.
He pointed to Co-operative Legal Service offering legal advice through its bank branches. “There is an increased risk of consumer confusion under those circumstances and it makes sense to ensure as much as possible that our rules are in line with FOS’s.” However, he said that to date LeO has seen very few complaints about ABSs.
It is also intended that the changes will help prepare LeO to start handling complaints about claims management companies later this year.
LeO said it does not anticipate that the changes will add substantially to the 75,000-80,000 contacts it receives each year; however, it does expect around a 10% increase in the proportion of contacts which will fall within its eligibility criteria. This will inevitably increase the number of full investigations – currently around 7,000 – that the organisation carries out.
Mr Sampson added: “We consulted heavily with legal professionals, regulators and consumer groups before making the revisions. I’m confident that they will stand us in good stead to remain an effective complaint-handling body.”