The Law Society has warned that the Legal Ombudsman may struggle to secure compensation for complainants when it assumes responsibility for claims management companies (CMCs) this month.
The Ministry of Justice plans to hand responsibility for CMC complaints to the ombudsman (LeO) from 28 January, more than two and a half years after proposing the change.
The Society said it supported extending the ombudsman’s jurisdiction but has warned that differences between law firms and CMCs mean enforcement will be difficult.
In particular, Chancery Lane has concerns that regulatory arrangements are different, particularly the requirement for professional indemnity insurance.
In a letter to the MoJ, Law Society director of policy Mark Stobbs points out that, unlike solicitors, CMCs need insurance only if they undertake personal injury work.
He added: ‘The unstable nature of the claims management market and this lack of consumer protection means that complainants may not receive compensation they are entitled to.’
The Gazette understands that talks have been held between the claims management regulator and LeO about what enforcement options are available for CMCs.
A spokesman for the ombudsman said it will have the same powers available as it has for lawyers.
He added: ‘[Ombudsmen] will be able to tell CMCs that they should reimburse costs, make an apology, give back papers etc and to order a firm to pay costs for any distress or inconvenience caused by its poor service.’