The legal complaints handler has welcomed the potential for expanding its scheme to unregulated providers – but warned it will take a fresh cash injection to make it possible.

The Legal Ombudsman this week formally responded to the Competition and Markets Authority’s recommendation that legislators seek to extend the scope of consumer redress.

This could be achieved, the CMA put forward, by increasing access to the ombudsman or through alternative arrangements such as the use of ADR or self-regulation.

The ombudsman said it was the most appropriate organisation to help consumers of unauthorised providers but stressed it would require a designated budget from central government, entirely distinct from the current levy, to commit to a scoping exercise.

‘There is potentially a large redress gap in the legal services market as it stands,’ said chief ombudsman Rebecca Marsh. ‘We are always keen to find ways to improve the landscape for consumers. We believe that extending redress to a whole new range of users of legal services would contribute to this and ensure a much greater level of consumer protection. However, as stated before, it would be inappropriate to use our current funding streams to work on expanding our jurisdiction.’

While not actively exploring the extended jurisdiction for now, LeO also rejected a proposal for it to collate information on unauthorised providers based on complaints that have come in.

The ombudsman said it appreciated that the information would help establish the scope of the issue of unregulated firms, but collecting the data would have cost implications.

Marsh noted: ‘We are funded by a levy from the [legal] profession, it would be inappropriate to use these finds to work on issues relating to those who have not had to pay. Therefore, there is a significant problem with establishing a budget for this work.’

The ombudsman said it would be impractical to take extra steps to collect information from all contacts, and counterintuitive to advise a consumer their matter was out of its jurisdiction while also providing information about the unregulated service provided.

The CMA’s final report on the legal sector was published in December 2016, with a number of recommendations designed to address unmet need for legal services among consumers and small businesses. Regulators have already committed to mandating law firms to provide more information on prices and complaints history.