Complaints: Backlog not coming down as fast as expected
The Legal Ombudsman (LeO) has proposed a 10.2% increase in its budget, or £1.8m, as it struggles to bring down the longstanding backlog of complaints in the face of high ongoing demand for its services.
It is also set to recommend doubling the case fee – charged for complaints resolved in the consumer’s favour where the service provider did not take reasonable steps to resolve it – to £800.
Most of LeO’s budget comes from a levy on the regulated legal profession, which it said today was letting consumers down with poor service.
The draft 2025/26 business plan and budget put out for consultation today warned that “a significant shift in complaint culture, led by regulators and the profession – underpinning positive engagement with LeO’s insights and interventions – is required to address unnecessary escalation of demand to LeO”.
It continued: “This also extends to the sector’s wider attitude to feedback on the service they’ve provided, so this is embraced as an opportunity to improve, rather than ignored or dismissed.”
LeO said its data showed how, over several years, standards of neither service nor complaints handling have improved – and in some areas have worsened.
In 2023/24, LeO found evidence of poor service in how providers handled complaints in 46% of the cases it investigated.
The current year’s budget of £18m was 7% (£1.2m) higher than the previous year. The proposed budget for 2024/25 is £19.8m. Nearly half of the extra cash will go on hiring more investigators, mostly to help bring down the queue of complaints awaiting investigation.
It is this queue, which reached a high of 5,862 unallocated cases in 2021/22, that has been LeO’s greatest problem for years. Though reforms – particularly the focus on early resolution – have helped bring it down, it has not fallen anything like as quickly as first forecast (the original goal was to get it down to a workable level of 500-1,000 by 31 March 2024).
LeO now expects it to be 2,875 at the end of the current financial year (31 March 2025) and projects that it will be 1,949 a year later.
The consultation said: “LeO has maintained its focus on reducing the number of unallocated investigations, but higher demand has slowed the rate of decrease. This means the queue is outside the expected range.”
A risk, it said, was that a further increase in complaints could reverse the downward trend altogether.
The extra money would allow LeO to reduce the average time for a case to be allocated to an investigator by 26% (from 149 days to 110 days), compared with by 1.3% (to 147 days) without it.
It said that, if demand increased at a similar rate as seen this year for the next two years (5%), then LeO would reach an “acceptable position” in terms of its queue and wait times by the end of 2026/27.
The consultation also revealed that the major change to the scheme rules last year, slashing the time limit for complaints, did not deliver the expected 10% reduction in new complaints; they actually increased by 0.8%.
A third of the extra cash is for an anticipated 4% pay award and so, even without the additional investment, the budget increase would be 4.7%.
The consultation also includes an optional extra £350,000 budget that would allow LeO to progress plans to publish full ombudsman decisions, using generative artificial intelligence to help overcome some of the difficulties of doing this. This would mean a 12.7% increase overall.
LeO said the increased demand seen since Covid appeared to be the new normal. “Persistently high demand, and persistent findings of service and complaint-handling failings, are clear indicators that consumers are being let down…
“It means LeO can’t currently deliver acceptable waiting times to the half of customers relying on it for an investigative outcome – even though it has transformed its service, so it is consistently resolving 25% more complaints than it did in the past.”
The body said its current performance levels were good. The number of complaints resolved has increased year-on-year and in 2024/25 “gone beyond the upper range of its business plan forecast”.
At the same time, demand has also increased beyond business plan forecasts – it anticipated receiving up to 13% more complaints than forecast by the end of the current financial year, along with more demand for resource-intensive investigations.
The average end-to-end customer journey time for cases of all complexities is now under 300 days, with almost half of cases now being resolved in under 60 days. But the most complex cases are taking over 720 days (almost two years).
The average time to resolve complaints by early resolution – around half of closed cases – was 48 days and overall, 44% of cases were resolved within 90 days: a marked improvement on LeO’s historic performance.
For cases needing an in-depth investigation, the average time to investigate once allocated is 160 days.
An ever-diminishing amount of LeO’s income comes from case fees (6.6% in the current year), as a result of the introduction of early resolution (case fees are not charged where LeO does not investigate).
Around half of investigated case closures are subject to a case fee but approaching 10% of them will not be paid this year due to firm failure.
The current £400 has not increased since LeO opened in 2010 and it said there was “a strong case” for reviewing the figure.
“We think, as a first step, that LeO should increase the level of the case fee to £800 for all cases it applies to.
“This will provide a more appropriate balance between the levy and case fee income, and support and incentivise efforts to improve legal providers’ tier-one complaints handling. In 2025/26 we will develop and consult on further options, including the potential for a tiered arrangement.”
However, because this would also need consultation, changes to the scheme rules and approval of the Lord Chancellor, any changes are unlikely to be in place before the end of 2025/26.
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