The Legal Ombudsman is preparing to introduce a tiered case fee structure and extend the scheme to allow small businesses to complain.

LeO today issued a call for evidence on proposed changes to how the scheme is run and financed.

The ombudsman wants to understand potential barriers faced by consumers under the current rules and why some are not making use of the scheme.

In 2012/13, the service dealt with 7,360 cases, a number which rose to 8,055 the following year. In 2016/17 the anticipated caseload is set to be around 6,500.

Key changes include extending the scope of the scheme: currently individuals and micro-businesses can use the service, but the proposal is to widen that list to cover larger businesses.

The ombudsman also proposes to have three tiers of case fee, replacing the current £400 flat fee for investigating a complaint. Unless the fee is waived, service providers would pay £200 where a complaint is informally resolved without a preliminary decision being issued; £450 where the complaint is resolved before a final decision; and £750 where the ombudsman has made a final decision.

The ombudsman says it is currently required to make a decision in 38% of cases.

The call for evidence notes: ‘Service providers often comment on the lack of differentiation in the case fees as well as the perception that case fees are unfair when complaints are pursued by a vexatious complainant.’

The ombudsman says it wants to adopt a ‘polluter pays’ system to fee waivers, ensuring that service providers only pay if they fail both on service and complaints-handling, not just on service. Currently the fee is not waived in around 40% of cases closed by the ombudsman.

The financial impact of the case fee changes is likely to be minimal, with fees still bringing in around £1.25m a year – 8% of LeO’s annual income.

The ombudsman says it expects an increase in informal resolutions and resolutions by preliminary decisions, with service providers put off from requesting a full ombudsman decision.

In addition to scope and fees, the call for evidence also reveals the ombudsman is considering rewriting the scheme rules to ensure they are easily understandable, possibly including examples and in plain English.