The Chartered Institute of Legal Executives (CILEX) has shared concerns over plans to increase the fees charged by the Legal Ombudsman (LeO), warning the proposed changes could see firms make “unmerited payments” to clients to avoid escalating costs.
A wide-ranging consultation launched in June outlined plans to increase the LeO’s fees in response to what it described as “unprecedented levels of demand” following a 37% increase in requests for its services in the last year.
The LeO currently charges £400 for the cases it progresses. The consultation included plans to introduce a staged fee structure where firms would instead be charged £200 where early resolution is achieved, £750 if there is an investigation but no ombudsman decision, and £1500 if an ombudsman decision is necessary.
An additional £400 would be charged if it can be established no final response to a complaint had been issued within eight weeks of the complaint being made to a firm, irrespective of the eventual outcome of any LeO investigation.
In its response to the consultation, which closed last week, CILEX said although it approves of the ‘polluter pays’ approach and considers the changes likely to incentivise improved complaint handling, it fears tiered fees could reduce the number of complaints reaching the ombudsman, with firms agreeing to pay consumers who were not entitled to redress.
The membership body has also raised concerns around the level of evidence required for a complaint to be accepted. While it acknowledges the importance of complainants being required to show evidence of detriment to reduce “vexatious or unmeritorious claims”, it disagrees with the proposed requirement for “serious detriment”, which it says could see more minor but warranted complaints denied a hearing.
CILEX agrees there should be a time limit of 12 months from the complainant having knowledge of the issue, but wants to see a long-stop exceeding the proposed 12 years to ensure those dealing with the fall-out out from poor service relating to wills or property advice are still able to make complaints.
Members considered the early stage case fee of £200 to be reasonable but said the £750 fee for post-investigation resolution is too high. The £1,500 fee to be paid out after an ombudsman decision would need to “demonstrate the value for money of the charge” to be justified, they said. Members welcomed proposals for the publication of final decisions, saying this would “encourage transparency and better consumer choice, whilst also acting as a deterrent for poor service or complaints handling from providers”.
CILEX president Sara Fowler said: “CILEX agrees that those firms providing a poor service and failing to resolve legitimate complaints at an early stage should bear the financial burden of resolving them. That said, CILEX has concerns about firms being driven to make unwarranted payments over fears that a complaint going to the ombudsman will prove even more costly. CILEX would like to see proportionate case fees and a fair process that mitigates against that possibility.
“While we expect the proposals to reduce the number of unmerited and vexatious complaints, it is important that we ensure more minor complaints still get a fair hearing and that consumers have the right to complain, even when issues with the service provided do not come to light until many years after the event.”
Once implemented, the rules governing the complaints process should be consistent and not revised again, CILEX said, even if demand were to drop. Any ability to meet changes in the volume of complaints should be “derived from LeO’s financial underpinnings and resourcing, not from the rules”.
Last week, the Law Society said it had “serious concerns” the proposals could “undermine confidence in the complaints process and therefore risk restricting access to justice”.
Law Society president Mark Evans said although the body welcomed efforts to “improve the efficiency, proportionality and effectiveness of the Legal Ombudsman scheme”, the proposals could encourage firms to settle complaints regardless of merit, because it would be cheaper than pursuing a legitimate defence.
