The Legal Ombudsman (LeO) has announced a proposed budget increase of 10.2%, amounting to £1.8m, in an effort to tackle its persistent backlog of complaints amidst ongoing demand for its services. This increase comes alongside a recommendation to double the case fee for unresolved complaints to £800.
The Legal Ombudsman has been grappling with significant backlogs in handling complaints, a situation exacerbated by consistent demand for its services. LeO’s operations are primarily funded through a levy on the regulated legal profession, which it claims is failing consumers by providing inadequate service.
Data from LeO indicates a lack of improvement over the years in service and complaints handling standards. In the 2023/24 period, poor complaint handling was evident in 46% of the cases investigated. The current budget stands at £18m, marking a 7% increase from the previous year. To address the backlog, the proposed budget for 2024/25 is £19.8m, with plans to hire more investigators.
The backlog of unallocated cases, peaking at 5,862 cases in 2021/22, remains a critical issue for LeO. Despite reforms aimed at early resolution, substantial reductions in the backlog have not been achieved. The aim was to reduce this to a manageable level of 500-1,000 cases by 31 March 2024, but current projections estimate 2,875 cases by the end of the financial year and 1,949 cases a year later.
LeO’s consultation highlights that while efforts to decrease unallocated investigations continue, the sustained demand has hindered progress. Without additional funding, the average time to allocate a case would reduce by just 1.3% from 149 days to 147 days. However, with the proposed budget, this allocation time could decrease by 26%, dropping to 110 days.
The draft business plan also reveals that recent changes to scheme rules, such as reducing the complaint time limit, failed to achieve the anticipated 10% decrease in new complaints, which instead saw a minor increase of 0.8%. A portion of the additional budget is earmarked for a pay award, bringing a net budget increase to 4.7%. Extra funds, approximately £350,000, are proposed to facilitate the publication of full ombudsman decisions using generative artificial intelligence.
LeO acknowledges the persistent high demand as a new reality since the COVID pandemic, complicating its ability to provide timely resolutions for half of its customers. On the positive side, the organisation reports resolving 25% more complaints than in past years, despite demand exceeding business plan forecasts by up to 13%.
For cases resolved through early resolution, the average time stands at 48 days, with 44% of cases closed within 90 days, reflecting an improvement in handling less complex cases. Nevertheless, the more intricate cases are taking significantly longer, with resolution times extending beyond 720 days.
LeO’s income from case fees has declined to 6.6% due to the introduction of early resolutions, which do not incur fees. Current fees have remained stagnant since 2010 at £400, prompting the proposed increase to £800 to balance the income structure and encourage improved tier-one complaint handling.
Despite these proposed changes, any implementation of the fee alterations will likely not occur until late 2025/26, due to the need for additional consultation and approvals.
The Legal Ombudsman’s quest for a budget increase underscores its ongoing challenges in managing rising complaints and service demands. While the proposed measures aim to enhance efficiency and reduce backlogs, the continuing high demand presents a formidable challenge. The anticipated improvements in case handling times and complaint resolutions are conditional on financial endorsements and regulatory changes. The situation remains a critical issue for the future of legal complaint management.
