Paying for the Ombudsman

Lawyers will lose their right to two free client complaints cases per year from April, raising an extra £1.6m in fees for the Legal Ombudsman.

Annual fee income should then amount to about £1.8m, which means the levy against firms will fall slightly from £16.8m to £15.1m, according to the Ombudsman’s budget plan for 2013/14.

Currently, lawyers are allowed two free cases per year. The Ombudsman also has discretion to waive fees in cases where it is satisfied the customer service was adequate and the remedy offered was reasonable. Otherwise, a £400 fee per case is chargeable.

The rule was introduced to address concerns that small firms and those operating in contentious areas of law would generate more complaints and therefore be unfairly affected by case fees. In practice, however, only 400 firms exceeded their free allowance—fewer than expected—while the Ombudsman waived fees in more than a third of cases—more than expected.

In November, the Ombudsman argued in a consultation document that the waiver option gave small firms engaged in risky work sufficient protection. The proposal received support from firms and legal bodies.

The Ombudsman anticipates it “may receive a very significant level of demand” when it begins accepting claims management company (CMC) complaints this year, and cites the example of the Financial Ombudsman Service, which receives 1,500 claims per day about payment protection insurance, half of which involve CMCs. However, it says this is impossible to predict.

Writing in the report, Chief Ombudsman Adam Sampson said: “Although we have made a good start to our work, we can still improve on the speed, cost and quality of our handling of complaints.”