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Consumer panel pushes for LeO’s compensation limit to rise to £150,000

LeO could no see no evidence for such a significant increase

13 June 2012

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The legal services consumer panel is pushing for LeO to increase the limit on the compensation it can award against law firms from £30,000 to £150,000.

LeO suggested in a consultation paper published in March that the limit should rise from £30,000 to £50,000.

It said the current limit did not “sit in harmony with the trends of the wider justice sector or justice policy”, such as the rise in the limit on High Court claims from £25,000 to £100,000 or the doubling of the small claims limit.

However, the legal ombudsman said there was “no evidence” to support a move to £150,000, the same level as the financial ombudsman.

In its response, the consumer panel said the compensation limit should reflect the “high potential level” of consumer detriment.

“Increasing this to £50,000 is a step in the right direction, but we would challenge the legal ombudsman to go further and harmonise with the financial ombudsman.

“Again, this would be used in rare situations, while safeguards against the legal ombudsman acting outside its competence already exist.”

The consumer panel agreed with LeO’s proposal to increase the time limit on complaints from one year to six years from the event, or three years from knowledge of the event.

It is also pushing strongly for third parties, who are not clients of law firms, to be able to complain directly to LeO.

LeO suggested in its consultation paper that only specific categories of third party should be allowed to complain.

In contrast, the consumer panel said the best approach would be to make all third-party complaints eligible except for specific types of cases.

The panel called for the removal of the two ‘free’ complaints firms are allowed before LeO charges them a case fee of £400.

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