The Legal Ombudsman will today start accepting complaints about claims management companies in a move that experts insist will help ‘clean up’ the claims industry.
The legal complaints service will take on the new responsibility 18 months after the government announced its intention to expand the LeO’s scope.
The ombudsman’s website will be updated to help CMCs understand its new role and to improve complaint-handling procedures.
The service is confident it can handle the anticipated extra 9,000 complaints every year, most of which relate to payment protection insurance.
Justice minister Lord Faulks said the move is another step towards driving out poor standards and practices in the claims industry. He said: ‘People should not have their time wasted by the poor services of some claims firms.
‘The new complaints service will make use of the Legal Ombudsman’s expertise and provide a new avenue of redress for those who have received poor service.’
The ombudsman will retain the same powers for CMCs as it does for lawyers: to order compensation, make firms reimburse costs or provide other forms of redress.
Richard Lloyd, executive director for consumer campaign group Which?, said clients will benefit from today’s expansion.
‘CMCs have a poor reputation, especially over rip-off PPI claims, so this will tip the scales back in favour of consumers, drive up standards and help clean up the claims industry.’
The extended scope comes after months of debate between Ministry of Justice and the Treasury about who would foot the estimated £2.9m cost.
The MoJ has decided that CMCs themselves should meet the costs of the increased workload, although some larger companies have suggested they will end up subsidising smaller entities which attract a disproportionately high number of complaints.
The Law Society has also expressed its doubts that the ombudsman will be able to enforce financial penalties, potentially leaving consumers without the compensation they are entitled to.