Legal Ombudsman Scheme Rules – the changes

The changes to the Scheme Rules form a central plank of the Ombudsman’s plan to address perceived performance issues and to improve them to an acceptable and sustainable level of performance by 2024.

What is changing?

Aside from several minor technical changes to ‘tidy up’ the rules, there will be four significant changes to the complaints process.

1 Changes to time limits

The time limits for referring a complaint to LeO under Rule 4 will be reduced and require that a complaint is 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 it was designed to be an informal alternative to legal action for service complaints. The far shorter six-month deadline for going to LeO from the point at which the lawyer provides their own properly signposted final response to a complaint is unchanged and will likely remain the most common reason that a complaint to LeO would be out of time.

The Legal Ombudsman will retain, and in fact extend, its discretion to accept complaints outside of these time limits, with the removal of the requirement within Rule 4.7 for there to be “exceptional circumstances” before exercising this discretion. An Ombudsman will instead be able accept out of time complaints whenever they consider it fair and reasonable to do so based on the evidence.

LeO 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 eight weeks of receipt. They do not want service providers to decline complaints because they believe that they are out of time. LeO says that the regulatory obligation to respond to formal complaints remains unchanged and that it is for it, and not the service provider, to decide if a complaint is out of time.

Immediate action by all legal service providers is needed now, to update their LeO complaints signposting information to reflect the correct new time limits. All relevant documentation will need updating including client care information, terms of business, any published information on websites and any other signposting or guidance document used to outline when a complaint can be taken to LeO.

The changes theoretically will apply to all complaints from 1 April 2023. Whilst it seems likely that LeO would, in practice, make use of its discretion where misleading time limits information has inadvertently been given, the Law Society guidance is that it would be prudent to give clients advance notice of what is happening. Whilst 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, at least current complainants (who are most likely to be impacted by the changes), are informed now of the changes.

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 dismiss a complaint without investigation where it is clear that the detriment to the complainant is not significant. This is a major 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 change should be very welcome.

LeO are also 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 where it is considered disproportionate, unreasonable or even impossible, for them to investigate the complaint and has promised to publish guidance on the circumstances in which this rule can be applied.

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 started, 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. From the viewpoint of the legal services provider this will be another welcome change.

3 No automatic right to escalate to an Ombudsman

The third major change within the new 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. The previous automatic right for either complainant or service provider to demand a new and independent decision by an Ombudsman if they do not agree with the investigator is therefore removed, although an Ombudsman will retain a discretion to pass a case for final decision where they consider it appropriate. The need for parties to engage and explain why they are dissatisfied, whilst always advisable, will be essential, once the new rules are in force.

4 New limits rights to object to the complaint

From 1 April 2023 lawyers will need to detail any Rule 5.4 challenge to an investigation “at the earliest possible opportunity”. For the first time therefore, if a service provider delays, their right to challenge that a complaint is out of time, out of jurisdiction or that it should be dismissed under Rule 5.7, may be lost. For those not fully familiar with the nuances of the Scheme Rules, it may be worth seeking expert advice at the outset, as to whether such a challenge is feasible.

Legal service providers will broadly welcome the changes to the Ombudsman’s Rules as a move towards a more proportionate scheme. Action is needed now to update complaints policies and other documentation. Consideration also needs to be given to how to inform clients of the changes – particularly current complainants. Finally, lawyers should be conscious of the need to act swiftly in a future LeO complaint in order to highlight any potential jurisdictional bars on the complaint proceeding before they lose the opportunity to do so.