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Legal Ombudsman urges regulators to act over CFA concerns


Sampson: lack of clear information

The profession’s regulators have failed to respond to a Legal Ombudsman report outlining its concerns about the way lawyers are operating conditional fee agreements (CFAs), the chief ombudsman has complained.

Adam Sampson has now written to the regulators to ask directly about their plans to address the issues it raised in the report published in January [2].

Back then, the ombudsman asked the regulators to review and monitor the issues in the report and propose ways to ensure there is greater consistency in the standards in this area.

The report said the use of CFAs should be monitored and reviewed by regulators to ensure that they do not lead to consumer detriment; that lawyers take care to explain the conditions attached to CFAs and make clear the circumstances where the customer may end up incurring legal costs; and that lawyers should exercise due care before agreeing to take on a case to ensure that the cases are well founded, minimising risk to themselves and their customer.

In the letter to regulators, published yesterday, Mr Sampson said: “Since publishing the report the number of cases we have investigated relating to CFA’s continues to account for just over 8% of our complaints. While this is not a widespread problem, when something does go wrong the impact on consumers is substantial.

“The ‘no win, no fee’ report looks at several case studies where lawyers broke the terms of their CFA and left consumers with huge and unexpected bills to pay, in one case as much as £30,000. But the impact is not limited to consumers; if we find poor service a lawyer can find themselves having to refund or waive a substantial amount of their costs.

“We also asked whether it is appropriate to continue to use the term ‘no win, no fee’ as it is clearly a term which has the potential to lead to confusion and misunderstanding with consumers.”

Mr Sampson said that nearly a third of complaints are about the transparency of costs information more broadly, “so it is clear that this continues to be an area where consumers feel they are not receiving clear information from their legal provider. As the legal market continues to evolve we need to be confident that consumers can access services with confidence and understand the financial risks that are involved, however the work is funded”.