Regulators have opted not to extend the scope of the Legal Ombudsman to include unregulated providers.

The Legal Services Board said this week it has decided not to explore measures to enhance consumer protection for clients using unregulated firms.

The LSB had included proposals in its draft business plan and suggested consumers would benefit from access to redress from the ombudsman should things go wrong.

But following several opposing views from members of the profession, the idea was dropped this week with the publication of the final business plan.

The LSB said: ‘We do not expect to proceed further at this present time with additional work to extend the scope of regulation or regulatory protections.’

The Law Society and the Chartered Institute of Legal Executives had both raised concerns about the standards the ombudsman would apply to unregulated providers.

Even voluntary redress arrangements would give the unregulated sector a ‘veneer of legitimacy’, the groups argued, that would mislead the public and do little to enhance consumer protection.

The Law Society also cautioned against the use of funds from regulated firms to assist potential competitors.

The Society’s consultation response had added: ‘LeO has significant powers to order redress for clients of the regulated legal community.

‘It would have no such power to order redress for the clients of unregulated providers and, further to this, would not be able to enforce decisions against unregulated persons.’

The LSB’s decision appears to halt, for now, the ambitions of the ombudsman to extend its reach.

The complaints-handler has been vocal in the past about the need for clients of wills and probate services, provided by non-lawyers, to have access to redress.

The Legal Services Consumer Panel has also lobbied for a voluntary complaints scheme for unregulated providers.