The Legal Ombudsman should have the power to begin its own investigations even when a complaint has not been made, a consumer champion has said.

The Legal Services Consumer Panel proposed that the scope of the ombudsman be broadened to include the authority to investigate firms on its own initiative, particularly when intelligence has highlighted systemic problems.

The proposal came as part of the panel’s response to the ongoing Independent Review of Legal Services Regulation (IRLSR), which made its interim report on the future of the sector last year.

Sarah Chambers, chair of the consumer panel, also questioned why clients’ ability to access redress depends on who they buy their legal services from, rather than the type of legal service they are buying. She said it was ‘to most people’s surprise’ that only a small number of legal activities are regulated and therefore open to redress.

Chambers added: ‘Giving the public general legal advice about fighting for custody of their children, claiming against an employer for unfair dismissal or carrying out some specific activities, such as making a will or preparing a power of attorney, can all be done by both regulated and unregulated providers leaving the unsuspecting consumer with no clear recourse to redress (if they choose the latter).

‘We therefore agree that there needs to be an expansion of the Legal Ombudsman role, preferably covering all legal services, both regulated and unregulated.’

But the panel raised concern about one suggestion that the ombudsman could investigate complaints initiated by providers about consumers considered vexatious. This, it was felt, would send the wrong message to the public about who the system is intended to protect, and could leave consumers feeling bullied into accepting settlement offers.

Chambers said the panel was already on record as highlighting ‘fundamental flaws in the regulatory architecture’, and she re-stated its preference for regulation based on activity rather than title.

She added regulators in future should have a clear duty to inform, consult and involve consumers in setting and applying their objectives. Alongside this duty, it was proposed, should be a consumer representation body independent of the regulator, with safeguards in place to protect its independence.

The ILLSR will submit his final report to the Ministry of Justice later this year.