LeO keen on bringing unregulated providers within its remit

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21 April 2017

Goldwag: strategy opens new chapter

The Legal Ombudsman (LeO) has pledged to avoid pursuing an “expansionist” strategy when considering extending its jurisdiction, but nevertheless welcomed the Competition and Markets Authority’s (CMA) suggestion that it could handle complaints against unregulated legal providers.

Meanwhile, a former Law Society president accused the ombudsman of having “swallowed a beginners guide to management speak” and urged it to focus on improving its core business.

Publishing its strategy and three-year business plan for 2017-2020 yesterday, LeO acknowledged that it had to address weaknesses in IT, customer feedback about delays, and “inconsistent ways of working”. Further, it admitted a need “to improve performance, improve the flow of cases and reduce backlogs of work”.

The plan said that modernisation of IT infrastructure and a “more integrated, end-to-end process to provide a better service to our customers”, together with “strong leadership, planning, governance and people” would help deliver a better service.

LeO is expected to deliver budget savings of 15% by 2019-20 compared with 2015-16, and in its business plan assumed a stable caseload of 7,000 cases a year until 2020.

Claims management company (CMC) cases are expected to remain at 3,400. As we reported earlier this month, the budget for 2017-18 will be £1m more than the previous year due mainly to bad debts from CMC cases.

The service will lose the CMC jurisdiction when it is transferred to the Financial Ombudsman at some point after 2018. The move would “impact LeO’s workforce, planning and finance”, the plan warned.

On future developments, it said LeO would be “discerning” about expanding its jurisdiction because instead its “primary focus should be to get the delivery of the current scheme right”. It stated: “We will avoid an explicitly expansionist strategy”.

However, if a decision was taken by the government to follow the CMA’s recommendation that LeO’s jurisdiction be extended to cover customers of unregulated providers, the ombudsman “welcomed opportunities” to work on the scheme – a longstanding ambition of LeO’s over the years.

In the responses to LeO’s consultation on the strategy – also published yesterday – the Law Society described these twin aims as “incongruent”.

The society complained that solicitors had financed the set-up costs of LeO and argued that any extension of the jurisdiction to unregulated providers should therefore involve them being charged “at a level which would subsidise the core activities of LeO relating to the solicitors’ profession in recognition of its payment of LeO’s formation costs”.

In an outspoken personal response to the consultation, Nick Fluck, a former Law Society president, said: “Talking about ‘adding value through evidence-based feedback’ sounds as though you have swallowed a beginners guide to management.”

He continued: “You do not drive improvements in the provision of legal services. You settle complaints – often by advising regulated firms or individuals that you will find against them unless [they settle themselves].

“Your role is not that of a high-minded developer of excellence. It is to manage complaints effectively and swiftly. Your correspondence delays are legendary.”

He concluded: “You need to focus relentlessly on doing your core remit effectively, swiftly and cheaply. You need to avoid denigrating the profession save where there is clear evidence of wrongdoing or failure to meet regulatory standards.”

Wanda Goldwag, the new chair of the Office for Legal Complaints, who last month called for a fundamental review of the complaints process, said the strategy opened “a new chapter for the organisation and sets out an ambitious three-year agenda, building on the organisation’s recent progress”.

She went on: “In a rapidly changing external context, the strategy sets out how [LeO] will play its part in implementing the recommendations of the [CMA’s] legal services market study. We will explore and exploit opportunities to extend consumer redress through changes to our jurisdiction and service.

“The strategy signals a stronger external focus and emphasis on stakeholder engagement. This will ensure that the scheme provides more effective feedback to the sectors. A root and branch review of business processes is driving a major programme of organisational change and IT system development.”

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