Earlier this year the Legal Ombudsman (LeO) undertook a review of its Scheme Rules to identify opportunities to improve the customer experience by enhancing operational efficiency, removing historic obstacles to resolving cases both quickly and with minimum formality, and to create a platform for the continued evolution of the Scheme in the years to come.
The review also focused on ensuring that any proposed changes continue to support the delivery of the regulatory objectives and reflect LeO’s new operational processes. Following consultation between February and April 2022, the final proposals were submitted to the Legal Services Board (LSB) and approved in July.
The new Scheme Rules, which are outlined below, will go live on 1 April 2023. There are three key areas for change, alongside several additional minor technical changes. These are outlined below:
Scheme Rule 4: Time Limits
From 1 April 2023, the time limits for referring a complaint to the Legal Ombudsman will be not later than:
The Legal Ombudsman will retain the ability to apply Rule 4.7, which allows an Ombudsman to exercise discretion to extend the 1 year time limit for specific customers if, on the evidence, it was fair and reasonable to do so.
The communication of the change to time limits is key and it will be important that the communication service providers provide to their clients is amended from 1 April 2023 to reflect the new time limits. This will include information published on service providers websites as well as any signposting or guidance document providers may use which outline when a complaint can be taken to the Ombudsman. The Legal Ombudsman will also ensure that information and guidance on time limits is clear and accessible through all of its customer channels. The circumstances in which discretion can be exercised and how customers can request that it be exercised will also be published on LeO’s website.
Scheme Rule 5.7: Ombudsman discretion to dismiss or discontinue a complaint
Rule 5.7(b)
LeO will be introducing the word ‘significant’ 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 whereas under current wording a complaint can only be dismissed under this rule if there has been no loss or detriment.
As with all dismissals under Rule 5.7 it is important to note that this is a discretion to dismiss that can only be exercised by an Ombudsman and only after the parties have been given the opportunity to explain why the complaint should not be dismissed.
Rule 5.7(p)
The introduction of Rule 5.7(p) 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.
It is important to note that this Rule would apply to a very small proportion of cases and then only to those where it is considered disproportionate, unreasonable or even impossible for LeO to investigate the complaint. LeO will be producing and publishing guidance which outlines the circumstances in which this rule can be applied.
Rule 5.7(q)
The introduction of Rule 5.7(q) will 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- but were not included within the complaint at that time. This will ensure that one an investigation has commenced, all parties have certainty as to the issues that have been raised.
It also ensures that parties cannot deliberately protract or delay investigations by seeking to add additional grounds to the scope of the original complaint.
Rule 5.19: Escalation of cases to an Ombudsman for decision
There will be a revision to Rule 5.19(c) to enable an Ombudsman to conclude that a final decision is not needed on a case if 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.
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 if 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.
Minor amendments will also be made to the following Scheme Rules:
Rule 1.1:
Removing reference to obsolete dates.
Rule 2.1:
Addressing historic drafting errors.
Rule 2.8:
Formalising the position on complaints by beneficiaries.
Rule 4.5:
Rule 5.4:
Addressing formal challenges to ongoing investigations.
Rule 5.7(a):
Clarifying discretion to dismiss a complaint.
Rule 5.7(c):
Ombudsman discretion to dismiss or discontinue a complaint (reasonable offer made) clarification.
Rule 5.7(d):
Rule 5.20:
Addressing situations where investigator’s findings and recommendations are not accepted.
Rule 5.33:
Addressing when an Ombudsman can direct that a hearing is required.
Rule 5.55:
Allowing the Legal Ombudsman to rectify uncontested errors.
Rule 5.62:
Updating reference to relevant data protection legislation.
Whilst we recognise that the changes are not yet live, we are publicising the changes now as it is important that Service Providers are given enough notice to ensure that any internal changes that may be required are in place for 1 April 2023. Over the coming months, LeO will be drafting and publishing guidance, including FAQs, on the Scheme Rules changes to ensure that customers are aware of how the changes might impact on them or their complaint. We will also ensure that all our templates, factsheets and guidance notes are updated and easily accessible to all our customers.
We are continuing to engage with regulators and professional bodies to ensure that they are fully sighted on the changes to our Scheme Rules and we will work with them to ensure that signposting information and complaints handling processes are up to date.
Further correspondence will be sent out in due course.
