CLC pushes back against proposed 19% increase in cost of Legal Ombudsman

The Legal Ombudsman’s (LeO) proposed 19% budget increase is not justified and needs to be revisited, the Council for Licensed Conveyancers (CLC) has said in proposing the creation of an external task force to help it deal with complaints more quickly.

LeO is seeking a budget of £15.3m for 2021/22 in light of a rapidly growing backlog in cases that pre-dates, but has been exacerbated by, the Covid-19 pandemic. By the end of March, LeO anticipates having around 5,000 cases in its pre-assessment pool – complaints that have been accepted but are yet to be allocated to an investigator.

Under this budget, the CLC’s contribution would increase to £600,000 – a quarter of its total operational budget for the delivery of regulation and consumer protection. The CLC has reduced its own budget to reflect the impact of the pandemic on its regulated community.

In its response to LeO’s draft business plan and budget, the CLC agrees that reducing the backlog is an “urgent priority” but says:

“It is regrettable that LeO considers that a further significant budget increase is required to deliver change, and we hope that proposal can be revisited.

“It is not clear how the increased budget will support improvements nor how they will be delivered. There are references in the consultation document to a people strategy and to IT improvements, but no line is drawn between the investment, changes that will be implemented and the projected improved performance.”

The CLC instead proposes:

  • Creating a small, independent, external task force to advise LeO on handling complaints promptly and efficiently to reduce the backlog faster than currently planned;
  • Enhanced external monitoring of progress against the business plan and budget to assure the profession that resources are being managed well and that change is being delivered effectively; and
  • Preparing a revised budget and business plan by the middle of 2021 that incorporates the learnings from the task force and that is more appropriate for the financial situation the legal sector is likely to find itself in following the impacts of Covid-19 and Brexit.

LeO’s cost per adjudicated case is estimated at £1,652, excluding the £400 fee the complained-about firm has to pay. To put this in context, research last year put the average fee for the purchase of a freehold property at £891.

The CLC said:

“This leads us to think that the current processes for complaints handling are not proportionate to the consumer harms that are being addressed and remedied…

“It seems that LeO is applying too elaborate or perhaps too legalistic an approach when it was established to deliver swifter consumer redress than had been the norm in the legal sector. There must be a question about whether LeO is operating an ombudsman scheme or taking a quasi-judicial approach. The approach no doubt contributes to the growing cost per case and overall burden on the legal sector.”

CLC chief executive Sheila Kumar says:

“LeO has a new and highly respected chair and a new chief ombudsman. It must take advantage of this fresh start and make haste to deliver improvements that win back the confidence of the sector and consumers.

“We are pleased to have had a positive initial reaction from LeO to our idea of a task force –better processes are clearly needed. In view of the economic outlook for the UK in 2021, LeO needs to take time to revise its budget and business plan, and the CLC stands ready to support this important work.”

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