Time limits for consumers to bring complaints to the Legal Ombudsman (LeO) will be abolished under proposals currently under consideration.
If implemented, the new rules will allow the LeO (which is an independent scheme designed to help resolve legal services disputes), to become a provider of ADR services under an EU Directive on consumer alternative dispute resolution (the ADR Directive).
The ADR Directive was implemented in the UK through regulations which came into force from 1 October 2015 (the ADR Regulations). Its purpose is to ensure that all consumers within the EU can, on a voluntary basis, seek redress when they have submitted complaints against traders to entities offering impartial, transparent, fast and fair alternative dispute resolution procedures.
However, the legislation does not allow ADR providers to impose blanket time-bar rules. In order for the LeO to become a certified ADR provider under the ADR Regulations therefore, it will need to change its rules in relation to time limits. Currently, the service requires a complaint to be brought no later than six years from the alleged act or omission, or three years from when the complainant should reasonably have known there was cause for complaint. This reflects the statutory limitation period.
Under the proposed amendments currently under consultation, complainants have unlimited time to pursue a complaint.
The only time limit the ADR Regulations allow relates to the period within which a consumer must submit their complaint after exhausting the service provider's internal complaints process. The ADR Regulations allow an ADR entity to refuse to deal with a dispute on the grounds that the consumer has not submitted the complaint within 12 months of the service provider's final response. This is an increase from the previous six month deadline.
The ADR Regulations do allow for limited circumstances in which providers can refuse to deal with a complaint. The six grounds for doing so are however substantially reduced from the 14 grounds listed within the current rules and do not include anything that could be construed as a limitation issue.
If the changes take effect, legal services providers and their professional indemnity insurers could find themselves on risk indefinitely in respect of complaints made to the LeO. That raises the question of how long legal providers will be expected to retain files and whether insurers will need to insist that files are kept indefinitely. We also anticipate practical difficulties in being able to investigate complaints older than six years and this is likely to impact upon management time.
There will no doubt also be concern among the legal profession that the new rules will encourage trivial and/or vexatious claims (although the ADR Regulations do specifically allow an ADR provider to refuse to deal with a dispute it considers frivolous or vexatious). Accordingly, the new rules if implemented, could have serious implications for firms and their insurers.
One possible advantage of the new rules would be if more disputes are required to be resolved informally by LeO, as it could reduce the number of litigated claims.
We suggest watching this space carefully.
The consultation period runs until 2 November 2015 and the consultation papers can be viewed on the LeO website.