Changes to the Legal Ombudsman Scheme Rules came into effect on 1 April 2023. Paul Wightman outlines what to expect
The changes to the Legal Ombudsman (LeO) Scheme Rules are the most significant overhaul to the rules since LeO first opened in October 2010. As a result, all law firms will need to update their client complaints information.
The backdrop to the current changes is increased scrutiny and criticism of the LeO’s performance. LeO has recognised the need to address the widely publicised delays and backlogs at the front end of its process and has committed to improve to an acceptable and sustainable level of performance by 2024. The changes to the Scheme Rules form a central plank of the ombudsman’s plan to address these issues. Any successful scheme requires proportionality, and the planned changes are long overdue and are widely expected to reduce the number of complaints handled by LeO.
What is changing?
Aside from a number of minor technical changes to ‘tidy up’ and update the rules, there are four significant changes since the new rules came into force on 1 April 2023.
1. Changes to time limits
The time limits for referring a complaint to LeO under rule 4 are to be reduced. The new rules require a complaint to be raised no later than one year from the date of the act or omission being complained about; or a year from the date when the complainant should have realised that there was cause for complaint. This is a significant reduction from the current time limits of six years and three years respectively.
It has always struck me as disproportionate for the scheme to adopt timescales akin to legal limitation periods when the Ombudsman Scheme was always designed to be an informal alternative to legal action for service complaints. It also felt out of kilter with the far shorter six-month deadline for going to LeO, which runs from the point at which the lawyer provides their own properly signposted final response to the complaint. This six-month time limit will continue and will remain the most likely reason that a complaint to LeO would be out of time.
The Legal Ombudsman will retain the discretion to accept complaints outside of these time limits. Indeed, the discretion will now be extended as the requirement within rule 4.7 for there to be “exceptional circumstances” before exercising this discretion, is to be removed. An ombudsman will instead be able to accept out of time complaints whenever on the evidence if they consider it fair and reasonable to do so. LeO says that this discretion will be exercised if the delay in bringing a complaint is caused by circumstances outside of the complainant’s control, including unreasonable delay in the handling of their complaint by the service provider at first tier.
The process for bringing a complaint to LeO will not change. The expectation will remain that a service provider should be able to review a complaint and put things right within eight weeks and the ombudsman will still only accept complaints where a final response letter has been issued or where a service provider has failed to provide a response within this period.
LeO doesn’t want service providers to decline complaints because they believe that they are out of time and says such complaints should be treated in the same way as any other complaint. LeO says that the regulatory obligation to respond to formal complaints remains unchanged and that it is for them, and not the service provider, to decide if a complaint is out of time, so no time limits should be applied by the service provider to their own complaints procedure. For solicitors at least, such an approach does appear to be in keeping with the broader regulatory duties to operate a complaints-handling procedure (rule 8.2 of the SRA Code of Conduct for Individuals).
The change to timescales will require immediate action for all law firms and other legal service providers to update their LeO complaints signposting information (which is required to include now out of date time limits). Changes will be needed across all relevant documentation including client care information, terms of business, any published information on websites and any signposting or guidance document which firms/providers may use which outline when a complaint can be takento LeO.
The Law Society guided law firms to communicate the changes to the time limits to their clients in advance of 1 April 2023. This is because, theoretically at least, the changes appwwly from 1 April regardless of when a complaint was made. While it seems likely that LeO would, in practice, make use of its discretion where misleading time limits information has inadvertently been given, it would be prudent to give clients advance notice of what is happening. While some firms may well take a view on how far they go to inform all existing clients in the absence of more specific regulatory guidance on the point, particular care should be taken to update current complainants. They are more likely to be impacted by the changes and incorporating information on the forthcoming changes should be communicated to clients sooner as soon as possible.
2. ‘Significant’ complaints only
The changes will also extend the circumstances in which an Ombudsman can exercise discretion to dismiss or discontinue a complaint under Scheme Rule 5.7.
The word ‘significant’ is to be introduced within rule 5.7(b) which will allow an Ombudsman to consider whether it is a proportionate use of resource and time to investigate a complaint where the detriment to the complainant is not significant. The introduction of ‘significant’ provides for cases to be dismissed if the loss, detriment, or impact is deemed minor enough that it would be disproportionate to conduct a full investigation. This is a very big change. Under the current rules a complaint can only be dismissed if there has been no loss or detriment at all. Many legal service providers have been anxious about the materiality of issues raised with LeO and so this is a very welcome change.
LeO will also be introducing a new rule 5.7(p) which will provide an ombudsman with the opportunity to consider if a case should be dismissed on the basis that the size and complexity of the complaint means that it would be disproportionate for it to be investigated. LeO says that it intends this new rule to apply only to a very small number of cases and then only to those where it is considered disproportionate, unreasonable or even impossible for them to investigate the complaint. LeO has promised to publish guidance outlining the circumstances in which this rule can be applied. In broad terms the rule simply appears to be another means by which LeO can better manage its capacity and limited resources.
A new rule 5.7(q) will also ensure that new issues cannot be added to an ongoing investigation if they were already known to the complainant at the time the investigation commenced. This will ensure that, once an investigation has commenced, all parties have certainty as to the issues that have been raised and parties cannot deliberately protract or delay investigations by seeking to move the parameters and add additional grounds to the scope of the original complaint.
3. No automatic right to escalate
The third major change within the rules will be the newly introduced option for an ombudsman in a revised rule 5.19(c) to conclude that a final decision is not needed where no substantive issues have been raised in response to the investigator’s findings or remedy. In those circumstances, the case would be deemed to have been resolved by the investigator’s findings, using an amended version of the existing rule 5.20 provision. This removes the automatic right that has previously existed for either complainant or service provider to demand a new and independent decision by an ombudsman if they do not agree with the investigator. An ombudsman will still have discretion to pass a case for final decision irrespective of the responses to the investigator’s findings if, for example:
- there were vulnerability issues, or
- the service provider has closed and a decision is needed for a claim against the firm’s run off insurance, or
- if the decision was needed for enforcement purposes.
4. New limits on objecting
Under the current scheme legal service providers can at any time seek to have a LeO complaint dismissed if it is out of time or for some other reason outside of the ombudsman’s jurisdiction. However, from April 2023 lawyers need to detail such challenges to LeO “at the earliest possible opportunity”. The new rule will mean that, if a service provider delays, this right may be lost. Many law firms do not appreciate the nuances of LeO’s jurisdiction and in the future, by the time that someone with that expertise is brought in, it might be too late. If you’re not comfortable with the detail of the scheme rules it might be worth speaking at the outset to someone.
For the most part lawyers will welcome the changes to the ombudsman’s rules. The changes provide for a more proportionate system in which very old or frivolous complaints will no longer fall within Leo’s remit. Firms will, however, need to take action to update their complaints policies and other documentation. Consideration also needs to be given to how to inform clients of the changes (current complainants in particular). Finally, lawyers should be conscious of the need to act swiftly in a future LeO complaint to highlight any potential jurisdictional bars on the complaint proceeding, before they lose the opportunity to do so.