The government has confirmed that the Legal Ombudsman will accept complaints about claims management companies from the end of January.
The Ministry of Justice today gave the go-ahead to the complaints-handler to start preparing now for the increased workload. The official start date is likely to be 28 January.
The department said it remains the position that the expansion costs – estimated at around £2.9m a year – should be met by the industry itself. The MoJ therefore approved a sliding scale of fees for CMCs to fund the increased costs of the scheme.
As outlined in May, companies turning over between £75,000 and £163,636 will pay an annual fee of £540. Any companies with a higher revenue will pay a percentage of their takings, with fees capped at £40,000.
Currently, firms with a turnover of less than £25,000 make up 40% of the industry: these companies will pay up to £250 in fees. Companies with less than £5,000 annual revenue will pay £75 a year.
The MoJ consulted on the fees structure earlier this year and received 24 responses, of which 11 supported the proposal.
Some opponents felt the fee levels for smaller businesses were too low, leading to larger firms subsidising others with poor practices.
Most alternative suggestions suggested a greater element of ‘polluter pays’ – in other words forcing those companies most complained about to pay more.
Responses also disagreed on whether the estimate of 3,000 extra complaints was set at the right level.
Some felt that the recent contraction in the claims management sector meant the estimate was too high, but others feared it was an under-estimate, with activity in payment protection insurance claims still high.
The Leo’s head of claims management, Simon Tunnicliffe, said: ‘We look forward to playing our part in raising standards across the claims management industry, and to finally giving consumers access to redress where they have received poor service.’
CMCs will have to include a reference to the complaints service in correspondence with clients, as solicitors do.