The Legal Ombudsman (LeO) should press to extend its jurisdiction to complaints about non-lawyer will-writers and the not-for-profit sector, to reduce consumers’ confusion over regulation, an academic study has recommended.
The academics also called on the Ministry of Justice to review “as a matter of urgency” the more limited powers it has to deal with complaints against claims management companies.
The report, commissioned by LeO from Leicester University’s Centre for Consumers and Essential Services, further urged a high-level review of the existing framework of redress in legal services to address fears it is unfit for purpose.
The findings add weight to the idea and in its recent strategy and business plan consultation that it should activate a voluntary jurisdiction over will-writing.
Concern has grown that a developing market in legal services outside ‘reserved’ activities has led to confusion for consumers, who research has shown tend to expect a legal service means they have a recourse to LeO.
The report warned that even if the Legal Services Board (LSB) were to recommend extending reserved legal activities to will-writing – following its on the subject – the Scottish experience of regulating will-writers suggested it could take three years or more to put in place.
“We would recommend, therefore, that [LeO] pursue the possibility of creating a voluntary jurisdiction for complaints about will writers who are not authorised persons,” said the academics.
It said the same should be considered for legal services provided by the not-for-profit sector – known as “special bodies” in the Legal Services Act. Existing regulatory arrangements are “anomalous”, they said, and there is “no immediate prospect of dealing with them as the Legal Services Board has only recently started to address the issues raised by special bodies.
“[Citizens Advice], for one, recognises that there is a need for some form of independent adjudication for dissatisfied clients,” the report said.
Also, “significant scope for consumer confusion” exists in relation to referrals by claims management companies (CMCs), such as over exactly what a solicitor has agreed to do. The use by such companies of the word “law” or “lawyers” in their titles is a source of confusion, the report argued.
A key problem is that the Ministry of Justice – which regulated CMCs – has more limited powers than LeO; in particular, it is unable to levy a financial penalty. “This is likely to give rise to consumer detriment. The Ministry of Justice may wish to explore and consult on this issue as a matter of urgency, particularly given the rise in the number of complaints [against CMCs].”
An over-arching review should be carried out by the LSB and Ministry of Justice to address what the report said are “gaps and anomalies” in the present “framework for redress in legal services”. These raised “serious concerns about whether it is fit for purpose, particularly in light of the developments that are taking place in this market”.
The report said LeO should also revisit the issue of accepting third-party complaints, which “seems to represent a gap in redress arrangements”, it said.
Last Friday, the Solicitors Regulation Authority – responding to a LSB consultation on the shape of regulation in the future – reiterated its long-standing call for all legal services to be reserved and regulated, “rather than starting from a more narrowly based review of individual activities as proposed by the LSB”.
SRA chief executive Antony Townsend said: “However, we accept that there is a case in the short term for the extension of reserved legal activities to specific activities such as will writing, while a wider review is undertaken.”