Redress for Legal Services

Transcription

1 Redress for Legal Services A Report for the Legal Ombudsman May 2013 Centre for Legal Management and Regulation, Northumbria Law School, Faculty of Business and Law, University of Northumbria.

2 Contents Remit... 3 Introduction... 4 Who, then, is a consumer of legal services?... 4 Consumer perception of what amounts to legal services:... 7 The Legal Services Market (s) The Core Authorised Person Legal Services Market The Alternative Legal Services Market The Third Legal Services Market who else may provide legal advice (even if as an ancillary)? Consumer Protection - legislative remedies The balance of power in the provider/ consumer relationship Consumer Empowerment What choice tools might help empower the consumer? Potential Impact of the Unempowered Consumer Where might redress mechanisms do more to empower the consumer? Conclusions and Key Questions

3 Remit We have been asked by the Legal Ombudsman to address the following aims: To identify linked professional legal services and the nature of relationships between consumer and provider. To identify the current redress models (including consumer protection legislation) operating in these professional services and any gaps and inconsistencies within these models. To gain an understanding to the extent to which current models may impact on access to redress for consumers of legal/linked services. And to answer the following questions: What are the linked professional services to consumers? What services are being offered and under what operating models? What redress mechanisms are available (if any) in these services? What powers are available to the complaint handler? What is the potential for confusion among consumers of professional services in accessing redress in these services? What is the power balance between the consumer and the professional in current redress models? What impact might this have on access to justice? What conclusions can be made? 3

4 Introduction The aims of this report, and associated questions to be answered, demonstrate a desire on the part of the Legal Ombudsman to consider redress for legal services from the perspective of the consumer of these services. This is a natural step in working towards the Legal Ombudsman s Vision that everyone can access legal services in which they have confidence 1. To realise this Vision, the Ombudsman must have insight into the experience of legal service provision from a consumer perspective, albeit that it is committed to considering the perspectives of provider and consumer in the resolution of any actual complaint. Who, then, is a consumer of legal services? Exploring redress for legal services from the perspective of the consumer necessitates an attempt to define the scope of legal services, no matter how blurred some of the boundaries required to set parameters may be. What sort of services come within the umbrella of legal services? That is a question to which there is no immediate or obvious answer when posed to legal service providers themselves, let alone the consumers of those services. It is also problematic for Regulators the Legal Services Board (LSB) itself will be consulting shortly on whether general legal advice should be a reserved activity, and part of that will involve exploring and pinpointing what could be said to constitute legal advice. When posed to a consumer of legal services, it is a question which is challenging indeed. The legal services market is complex. The introduction of ABS in October 2011 has heightened the breadth of business models operating in the sector and, along with other regulatory changes and economic conditions, has acted as a catalyst for change in the legal services market. This has lead to the need for the LSB and others to monitor the impact of ABS and other regulatory change on this market. They too must grapple with defining the market to be monitored. Oxera prepared a report in September 2011 for the LSB, seeking to provide a framework to monitor the legal services sector. Introducing the report, Chris Kenny of the LSB noted that the legal services market is hugely complex Legal Ombudsman Strategy , Oxera (for the Legal Services Board A Framework to Monitor the Legal Services Sector, September

5 In his report 3 on the regulatory framework for legal services, Clementi charted the historical difficulty of defining legal services and touched on the issue of reserved and non-reserved activities 4. He did not himself review the distinction, and took the view that the time taken would be prohibitive and that it was for the government to determine where the regulatory net fell 5. He did consider that the market could be analysed in terms of an inner circle of reserved legal activities, and an outer circle of non reserved legal services more broadly defined (considered below). This approach, however, does not tell the full story. The central problem is that if a person is authorised to carry out an inner circle activity (a reserved activity), other outer circle activities provided by him/her which are not reserved also happen to be regulated by virtue of his/her already authorised, inner circle status. Another provider only carrying out an outer circle activity would not be so regulated. However, in attempting to chart the legal services market, any definition would include the core authorised person legal services market ie services where there would be little argument (from either provider, consumer or regulator) that they fell within the definition of legal services, for example services provided by a Solicitor, practising Barrister or Chartered Legal Executive. Even within that core authorised person market there is a divide between reserved and unreserved legal activities. For instance, both Solicitors and consumers may broadly agree that all services provided by a Solicitor are legal services but only a minority of services offered will in fact require regulatory authorisation eg be reserved activities. So, a Solicitor requires to be authorised and regulated to provide probate advice but would not need to be authorised and regulated to provide employment advice: s/he just happens to be so regulated by virtue of the fact that s/he is in any event authorised in relation to reserved activities. Someone else providing employment law advice need not be regulated for that activity per se. This distinction may not matter if it were understood by the consumer, but the reality is that consumers are highly likely to be blind to this distinction. The Legal Services Institute has argued that the distinction between reserved and unreserved activities is without rationale and is largely a result of historical political horse trading 6. Whatever its roots, its impact in 2013 is that it continues to fundamentally affect the shape of the legal services market and its regulation. The impact of the distinction is softened by the practitioner based approach of frontline regulators. This means that where a practitioner is 3 Clementi (2004) Review of the Regulatory Framework for Legal Services in England and Wales 4 Reserved activities are listed in Schedule 2 of the Legal Services Act 2007 and include: exercising a right of audience, conducting litigation, reserved instrument activities, probate activities, notarial activities and administration of oaths 5 Op cit p Legal Services Institute (2010) Reserved Legal Activities History and Rationale 5

6 carrying out a reserved activity, they are also regulated for all other activities they carry out, even if unreserved. This means for example that a practitioner regulated by the SRA to carry out probate activities would also be regulated by the SRA in relation to will writing. A provider who was not caught by the regulatory net for a reserved activity would not be regulated in relation to will writing 7. There are tensions between the activity-based approach of the reserved/ unreserved activity distinction, and the remit of the LSB whose remit, Oxera note, is in practice practitioner based. They stated that this limited their report, and set the parameters of the market to be studied, as this means that the LSB is concerned with monitoring all activities (reserved or otherwise) undertaken by reserved or authorised persons. To properly put unreserved activities carried out by reserved persons into some sort of context, Oxera note, would require some acknowledgement and monitoring of unreserved work carried out by unreserved organisations such as charities, trade unions, CAB, CLACs. To adopt this approach they say, it may be necessary to use a much broader definition of legal service suppliers and include non-authorised persons. Focusing on activities of authorised persons without looking at the whole of the legal services market gives an incomplete picture of a consumer s experience of what they may perceive the market to be. This is important, Oxera note, because: where alternative legal service suppliers to authorised persons are available, this can directly affect the consumer s experience. For example, trade unions may provide free advice about employment law; the CAB or CLACs may be able to offer face to face advice more locally than authorised persons; and the quality of advice received from alternative legal service suppliers may also affect consumer confidence in the service provided by authorised persons. Thus, they note that for such reasons it is important to bear the alternative legal service suppliers in mind, but that it is unlikely to be practical to collect data on the full breadth of the legal services supply base. The legal services market for Oxera, is hard to frame as it is difficult to define and to monitor. They do explore the complexity of the more narrow authorised person legal services market and attempt to categorise work types and suppliers to provide a framework enabling the LSB to monitor and analyse that market going forward. Thus there are complexities even within this core authorised person legal services market in terms of supply side segmentation 8. 7 The LSB has recommended that will writing becomes a reserved activity but this recommendation was rejected by the Ministry of Justice in May Oxera op cit Table 2.6 p 25 6

7 If the core authorised person legal services market is complex, it is itself a categorisation or label which would mean little to most consumers in terms of their perception of what the legal service market is. Many law graduates have little concept of reserved activities and that an alternative legal service supplier market exists. Law graduates are often deflated when asked to focus on what you actually need to be legally qualified to do. Oxera note the reserved activities are limited in scope compared with what are commonly understood as legal services. Clementi himself noted that there are a number of services which would be regarded by most people as legal services which are not reserved and can be provided by anyone who cares to do so 9. To get a sense of the size of this alternative legal supplier market, the Law Society s Market Analysis 2012 stated 10 that In England and Wales the legal services market comprises between 267,000 and 320,000 regulated and unregulated individuals providing reserved and unreserved legal services. Solicitors account for 38-46% of individuals, 44% of entities and 58% of turnover. However, they note that the role of non-solicitors and non-barristers is significant, clearly as they are in the majority of individuals. Consumer perception of what amounts to legal services: Most consumers would be oblivious to the distinction between reserved and unreserved legal activities, and that between core authorised person legal services market and the alternative legal service supplier market. Both of these labels will cover areas that consumers would most probably consider as legal advice ie primarily concerning legal rights and obligations such as in relation to property, probate, employment law, will writing etc. There will, however, be other advisers who give what the consumer may perceive to be legal advice, ie advice on legal issues, which fall outwith either the core authorised person market or the alternative supplier market, in so much as they are secondary or incidental to a related primary service such as estate agency, finance or insolvency. This could include for example, advice from accountants, architects and charities on matters which concern legal rights and obligations. A consumer may well label such advice legal advice even where the supplier is not labelled primarily as a legal services supplier core authorised person or alternative. Clementi s definition of the outer circle of legal services would include both this alternative 9 Clementi op cit p92 10 Law Society Market Analysis 2012 Summary: Overview and scenarios p2available at 7

8 legal services market where services are perceived as primarily legal, and a Third legal services market where legal services provided by others whose primary function may be in relation to a related service (eg. an architect giving advice on planning law): advice and assistance in relation to the operation or exercise of legal rights and the performance of legal obligations; and advice and assistance in relation to all forms of resolution of legal disputes 11 The key concern for this report arising from lack of consumer awareness about what does and does not amount to legal services relates to redress where the provision of that service goes awry. There are many examples of situations where a consumer may receive what they perceive to be legal advice from a provider not regulated by an Approved Regulator within the supervisory ambit of the LSB this could be eg from a supplier in the alternative legal supplier market or an adviser such as an architect who also advises on planning as part of his/ her service. In policy terms, confusion about redress matters for two principal reasons: What redress is available for services provided, and how does this differ from redress that would have been available if the party giving legal advice had happened to be an authorised person? Any disparity in redress would be of concern to those seeking to engender confidence in legal service provision. Confusion about redress is likely to act as a deterrent to consumer pursuit of redress. If a consumer is confused about the nature of services provided and in particular, whether they are legal services they will be unable to effectively seek redress or complain. Complaints and redress mechanisms have a role to play in securing standards of quality of services. Clementi anticipated 12 a legal services market shaped by competition, with the consumer as an agent to shape the competitive landscape. It is therefore important to consider the extent to which confusion over effective redress inhibits consumer empowerment and has a potential impact on the consumer s ability to shape the market as Clementi envisaged. 11 Clementi op cit p Clementi op cit p99 8

9 In practical terms, the problem with consumer confusion and perception of what may amount to legal services arises where: They think a service is a legal service and is regulated, but it is not there may be no redress. For example, a consumer may receive housing advice from a charity which is not regulated, and is part of the alternative legal supplier market. His/ her neighbour may receive housing advice from a Solicitor or Chartered Legal Executive, and this service is regulated, as part of the core authorised person legal market. They think a service is regulated it is, but there is confusion as to by whom it is regulated. This deters the consumer pursuing redress. For example, the consumer receives advice on inheritance planning from an accountant which s/he perceives as legal advice. S/he is unclear about who to complain to when it goes wrong, and this deters him/her seeking redress. This paper aims to illustrate situations in which this might arise and consider the extent to which that may result in consumer confusion. Which services attract a redress mechanism and which do not? From whom may redress be sought? What sort of redress mechanism is available? What powers are available to the complaint handler? In a market which comprises numerous regulators, the mixture of reserved and non-reserved activities, the separation of service and conduct complaints and so on, it may be difficult for consumers to understand their rights and protections. The first step in that process is therefore to consider some (non-exhaustive) scenarios in which this may occur: What legal services/ linked professional services are being offered to consumers and under what operating models? What redress mechanisms are available (if any) in these services? What powers are available to the complaint handler? 9

10 The Legal Services Market(s) The difficulties in defining the legal services market have been outlined already. Given the desire of the Legal Ombudsman to understand legal services and redress from a consumer perspective, for the purposes of this report we have approached the legal services to be considered from the practical perspective of a consumer of those services rather than from a technical or academic perspective of what should and should not be included within the definition of such services. For example, a consumer may be given advice on a matter they consider to be primarily legal, from a non legal advisor for example, planning law or party wall advice from an architect, estate planning advice from a financial advisor. Services and advisors selected for consideration in this report have therefore been selected on the basis that such advisors could give advice perceived by a consumer to be legal in as much as it affects or impacts on the consumer s legal rights and/or obligations. We consider that the legal services market and such advisors can be broadly categorised as follows: The Core Authorised Person Legal Services Market This comprises services provided by authorised persons (s129 LSA)(whether a reserved activity or not): Solicitors Barristers Chartered legal executives Law costs draftsmen Notaries Patent attorneys Probate practitioners Trade mark attorneys Registered European lawyers Redress is available through the Legal Ombudsman in relation to all services carried out by the authorised person. 10

11 The Alternative Legal Services Market This market comprises providers who may be regarded by a consumer as primarily providing legal services but who need not be authorised (and are not authorised) in relation to those activities. Barristers - non practising What legal services are being offered and under what operating models? A consumer may receive legal advice from an adviser who states that they are a non practising barrister. The consumer could perceive this as advice from an authorised person who just does not appear in court. Generally speaking (subject to limited exceptions) any barrister who does not hold a practising certificate must not hold himself out as a barrister in connection with the provision of legal services. A non-practising barrister 13 must notify the Bar Standards Board 14 if s/he is providing legal services, which is defined very generally, but broadly "legal services" includes legal advice representation and drafting or settling any statement of case witness statement affidavit or other legal document but does not include: a) sitting as a judge or arbitrator or acting as a mediator; b) lecturing in or teaching law or writing or editing law books articles or reports; c) examining newspapers, periodicals, books, scripts and other publications for libel, breach of copyright, contempt of court and the like; d) communicating to or in the press or other media; e) exercising the powers of a commissioner for oaths; f) giving advice on legal matters free to a friend or relative or acting as unpaid or honorary legal adviser to any charitable benevolent or philanthropic institution; 13 who was called to the Bar before 31 July

12 g) in relation to a barrister who is a non-executive director of a company or a trustee or governor of a charitable benevolent or philanthropic institution or a trustee of any private trust, giving to the other directors trustees or governors the benefit of his/ her learning and experience on matters of general legal principle applicable to the affairs of the company institution or trust. They must have a minimum insurance against professional negligence claim of 250,000 and must give any potential client a health warning detailing their status and any limits on the services they can provide and make explicit that they are not regulated by the BSB and that, as such, they are not governed by compensatory powers in relation to inadequate services. A barrister can therefore call him/ herself a barrister in relation to a client or third party provided s/he complies with the health warning and notification provisions above. S/he cannot carry out reserved legal activities. If however, all the work that a non practising barrister does falls outside the definition of "legal services", someone may hold him/ herself out as a barrister without complying with the "health warning" provisions described above. Traditionally, consumers have accessed the services of a barrister using a solicitor as an intermediary. There are now businesses and barristers that offer direct barrister access, and it is likely that there will be an increase in consumers accessing the services of a barrister directly. See for example, Advise Me Barrister and Stobart Barristers 15. In each case, with whom the consumer contracts would depend on the contractual terms and conditions. Does the consumer contract directly with eg Advise Me Barrister? Or does the consumer contract with the barrister directly, with Advise me Barrister acting as an introducer? If the latter, the legal services provided by the barrister would be regulated by the BSB. If the former, then the legal services would be provided by an unauthorised company, part of the alternative legal services market. In the case of Advise Me Barrister, for example, while terms and conditions are available on their website 16, it would be difficult for the consumer to interpret them to establish the boundaries of their contractual relationship with the barrister, and with Advise Me Barrister. Advise Me Barrister refer to pending approval from the Ministry of Justice and in their terms and condition to being subject to LeO jurisdiction, so it can be inferred that they are acting as a Claims Management Company but would

13 this be clear to a consumer? The linguistic emphasis on direct access may give a different impression, particularly when viewed in conjunction with the terms and conditions. The Legal Services Consumer Panel has pointed out: At present, the vast majority of clients will find a barrister through solicitors, who are better able to unpick the subtle differences in terminology. However, as more clients select a barrister directly, often in response to advertising, it is even more important that professional titles are unambiguous in their meaning. 17 What redress mechanisms are available (if any) in these services? What powers are available to the complaint handler? For a non-practising barrister not providing legal services, who is not required to provide a health warning, there is no redress mechanism available to the consumer other than common law remedies. There are examples of prosecutions 18, where a non practising barrister has failed to give a health warning and has sought to provide immigration advice, but this is of little comfort to the consumers involved. For a direct access barrister where the consumer actually contracts with the barrister directly, or a regulated barrister or a non practising barrister providing legal services who has given a health warning a redress mechanism is available through LeO. The BSB explain that Barristers can be employed, self-employed or nonpractising. Barristers who are self-employed work from offices known as 'chambers', the process for making a complaint about a barrister is the same for all types of barristers para

14 Housing advice What legal services are being offered and under what operating models? A consumer may receive housing advice from a charity or local authority. Housing advice is generally sought by people in need, and vulnerable consumers. Key sources of advice include charities and local authorities. Advice can typically cover arrears including eviction, repossession, rent arrears, emergency housing and landlords responsibilities. Given the recent legal aid cuts (1 April 2013) which will remove this advice from the remit of legal aid, this is an area which is likely to increase in use. Shelter reported in their most recent Annual Report (for 2011/12) that more than 50,000 households are in temporary accommodation in England. More than 1.8 million households are on a waiting list for social housing, and more than 200,000 possession claims have been issued in England alone in the last year 20. Operating models therefore include, for example, local authorities which are a key source of housing advice 21 and charities such as Shelter. What redress mechanisms are available (if any) in these services? What powers are available to the complaint handler? In the case of the local authority, the relevant Council complaints procedure would apply and a redress mechanism is available under the auspices of the Local Government Ombudsman (LGO) 22. This mechanism provides that complaints about various categories of housing advice will be considered where advice has been provided by a local authority. An internal complaint must be pursued first and the local authority has 12 weeks to resolve it, failing which the Ombudsman can investigate a complaint. The Ombudsman has a wide range of outcomes available such as order an apology, ordering a decision to be reconsidered, requiring improved future procedures, and may reimburse or compensate a party. It does state however that it has no legal power to force a body to follow their decision but bodies almost always do 23. Shelter give detailed advice on how to complain about housing advice from a local authority, but give less detail on how to complain about Shelter themselves. Those is typical of the sort of provision and advice offered

15 unhappy with service from Shelter are advised by them to give full details of the Shelter service complaint. They undertake to acknowledge the complaint within 3 working days and to investigate and respond within 21 working days. No details are given of how any such complaint may be resolved or determined. There is no standard redress mechanism for charities offering housing advice. This lack of redress mechanism is also a problem for the consumer who receives advice from a charity on other legal matters. There is a clear disparity in redress where someone uses a local authority, or charity housing adviser, or an adviser giving housing advice who happens to be already regulated as an authorised person. Immigration Advice What legal services are being offered and under what operating models? The Immigration and Asylum Act 1999 established the Office of the Immigration Services Commissioner (OISC) 24, which is an independent public body. It is a criminal offence for anyone to give immigration advice or services in the UK unless they are either: a regulated solicitor, barrister or chartered legal executive or regulated by the OISC. Their website details numerous instances of successful prosecution of illegal immigration advice. As a result of the practitioner focus of reserved activities, even although immigration advice is not reserved, an adviser regulated by another Approved Regulator can also provide immigration advice and need not register additionally with the OISC. Their website also lists numerous registered immigration advice providers both for profit and non-profit. It also has a very small list (4) of prohibited advisers. Immigration advice is not a reserved activity, and may be provided by companies such as Immigration Advise Service 25 who claim: At the Immigration Advice Service we have become one of the most trusted immigration lawyers (emphasis added)that people with immigration issues approach, offering a friendly, professional and detailed service that does all it can to argue your case to the UKBA and the courts

16 It may be difficult for a consumer to know if an adviser is regulated by the OISC as many companies have closely associated names. For example, if a consumer was to use a search engine such as Google to look for Immigration Advice Service, it would offer the consumer the webpage This site is headed Immigration Advisory Service on the search report. The provider website itself however is headed Immigration Advice Service. On a homepage busy with text, it carries a box with the OISC logo. If the consumer is aware of the meaning of the OISC logo then they may seek to check the OISC register. On checking the list they will find several companies with similar names. At this point, they will already have come across two names for the company Immigration Advisory Service and Immigration Advice Services. On checking the OISC register they will find Immigration Advice Service listed at several addresses and also two entries for Immigration Advisory Services (UK) Limited. As the original website did not contain a company number, and the OISC register does not list company numbers, how is a consumer to be sure whether the company they are interested in is registered? The Legal Services Consumer Panel reported 26 that: The SRA currently regulates around 1,300 firms which carry out some form of immigration work, while the Office of the Immigration Services Commissioner (OISC) regulates 1,930 organisations (3,375 advisors)providing immigration advice. ILEX Professional Standards/CILEX currently have 27 immigration advisors on their immigration register. The Bar Biennial survey identified 4% of barristers who indicated that they provide immigration advice and services, with only 2% stating that it is their main area of practice; They also identified that it is an area which is problematic in that many consumers are extremely vulnerable and much advice is poor and good advice makes a demonstrable difference to outcomes. They advised that asylum seekers were at risk of serious detriment from a complex asylum process and potentially sloppy work by immigration advisers. 26 Legal Services Consumer Panel (15 October 2012) Research Note: Immigration and Asylum Services and see also, eg. 16

17 What redress mechanisms are available (if any) in these services? What powers are available to the complaint handler? A complaint about immigration advice provided by an authorised person (eg by SRA, BSB and CILEX) would be made to LeO and a redress mechanism is available. The OISC will receive complaints about anyone giving immigration advice and filter accordingly. If the adviser is regulated by an Approved Regulator, the complaint will be passed on to that regulator. If the adviser is regulated by OISC, it will investigate the complaint for regulatory purposes. The OISC can also pursue action such as prosecution against advisers who are not registered and are therefore advising illegally. They state that the investigation process can take up to 6 months and that if the adviser is otherwise regulated they will probably refer it on to the other regulator. The suggestion is therefore that this is not done immediately and there may be a time lag initially. What redress may be given? The OISC can take action against the adviser to prevent others receiving poor advice or services for example, by raising practice points which an adviser is expected to implement. They cannot help with refunds or award compensation. There is a clear disparity in redress where someone uses an adviser regulated OISC and an adviser giving immigration advice who is already regulated in any event as an authorised person. Employment advice What legal services are being offered and under what operating models? Employment law is not a reserved activity 27. There are no restrictions on who may provide employment law advice and in practice it can come from a number of sources a regulated provider such as Solicitor or Barrister or an HR company or trade union or an insurance company or a claims management company. An additional example is where a consumer may be given employment advice by ACAS. What redress mechanisms are available (if any) in these services? What powers are available to the complaint handler? 27 There are now some restrictions on who can appear in an employment tribunal. The adviser representing a party in the employment tribunal must either be an authorised person, or someone otherwise authorised by the Ministry of Justice. The MOJ regulates registered Claims Management Services (Compensation Act 2006 s4) and that includes services which amount to employment tribunal representation.; 17

18 A complaint about employment advice provided by an authorised person (eg by SRA, BSB and ILEX) would be made to LeO and a redress mechanism is available. If advice (rather than employment tribunal representation) is provided by an unregulated adviser then there is no redress mechanism, aside from common law remedies (e.g. where a claims management company is used). There is a clear disparity in redress where someone uses an authorised person for employment law advice, and an adviser giving employment advice who is already regulated in any event as an authorised person. Legal advice This covers general legal advice on issues in addition to those dealt with specifically earlier in this report. What legal services are being offered and under what operating models? The LSB as part of its Business Plan 2013/2014 will continue to examine the scope of regulation and will assess in particular the risks posed to consumers by unreserved legal activities (general legal advice) irrespective of whether or not these are delivered by an authorised person 28. The LSB will also be assessing risks associated with DIY Law this would include for example, the use of online documents (see below). There are practical and political difficulties in seeking to regulate the provision of general legal advice and the Legal Services Board s coming consultation on this should be interesting. What redress mechanisms are available (if any) in these services? What powers are available to the complaint handler? At present there is no redress mechanism for consumers in relation to general legal advice about unreserved legal activities from an otherwise unauthorised person. Such advice from an otherwise regulated person would carry a redress mechanism. There is a clear disparity in redress where someone uses an unregulated legal adviser and an adviser otherwise regulated as an authorised person. DIY Documents

19 What legal services are being offered and under what operating models? Several companies now provide online legal documents. For example, AA Legal Documents, Law on the Web and Rocket Lawyer 29 all enable consumers to purchase legal documents which require the consumer to complete the blanks. There is scope for consumer confusion here as to the nature of what is provided; goods, or legal services? This becomes especially confusing where, for example, consumers with AA legal expenses cover get free access to legal documents and are entitled to a free half hour of legal review. Non-policy holders can also opt for a Lawyer Managed Document Review Service who will review and make amendments to draft documents where required. The terms and conditions used by the AA in this instance compound this confusion 30. The LSB will be investigating the consumer risk posed by online document services (2013/14 Business Plan). What redress mechanisms are available (if any) in these services? What powers are available to the complaint handler? It is not entirely clear (below) whether provision of these documents is classed as the sale of goods or provision of a service, but while the provision would attract some redress at common law in either case, there is no redress mechanism for such provision unless the provider happened to be otherwise authorised in any event. The Third Legal Services Market who else may provide legal advice (even if as an ancillary)? This market comprises advice from other advisers whose function may not primarily be as a legal adviser, but who may nevertheless give advice which may be perceived by the consumer as legal advice, in the course of providing another service. This could include advice which impacted or concerned the consumer s legal rights and obligations. Insurers What legal services are being offered and under what operating models? This is an active area of the market, particularly in light of legal aid cuts. Many companies now offer legal expenses insurance as an add-on to other forms of

20 insurance and consumers can also purchase stand alone legal expenses products and deal directly with a legal expenses insurer such as, for example, MSL Group 31 who offer packages for family law and others. The main legal expenses insurer has been DAS 32. They have just taken their offering a step further by acquiring a law firm and becoming an ABS 33. This means that the following examples could occur: A consumer buys legal insurance with another item. When something goes wrong the consumer will then receive advice directly from the insurance company. A consumer takes legal expenses insurance out directly with an insurer such as MSL group, and receives legal advice from MSL in the initial stages, before being passed on to a Solicitor if the matter becomes more complicated. A consumer takes legal expenses insurance out with a company such as DAS which is an ABS and receives advice from that ABS What redress mechanisms are available (if any) in these services? What powers are available to the complaint handler? In the latter scenario of dealing with an ABS, regulation would be provided by an Approved Regulator and redress would be available through LeO. In the other scenarios, LeO would not have jurisdiction and redress for legal advice from the insurer themselves would be available via the Financial Ombudsman Service 34 (FOS), which covers claims against an insurance company. The FOS website by its nature focuses on the financial aspects of a complaint against an insurer; its remit is based on regulated activities. The FOS covers a wide area of complaints, as they say themselves from pet insurance to stocks and shares, and it includes complaints about insurance. It cannot consider certain disputes but these are explained as being complex on their website and they advise consumers to call them to discuss. There is a link on their website to the rules governing excluded claims which is currently unavailable. In short, it is not easy for a consumer to know whether or not the claim is covered or

21 even what types of complaints will be considered. The Handbook is accessible via a google search but is difficult in itself for consumers to navigate in terms of signposting and the number of numerical hyper links 35. There are also time limits within which a complaint must be made a complaint must be made within 6 months of the date of the firm s response (and the response must mention this 6 month time limit) and within 6 years of the date of the event the consumer is complaining about (or 3 years from the date they knew or should have known that they had cause to complain). The FOS s powers include compensation for losses up to 150,000 (for complaints made after 1 January 2012). Surveyors What legal services are being offered and under what operating models? Many Chartered Surveyors offer a service restricted to property valuation. However, many Chartered Surveyors also additionally offer advice on matters such as the Party Wall Act 36, loft conversions and planning. Much of this could easily be classified by the consumer as legal advice. What redress mechanisms are available (if any) in these services? What powers are available to the complaint handler? If a consumer wanted to make a complaint about such advice, the Royal Institute of Chartered Surveyors 37 (RICS) deals with complaints against chartered surveyors whom it registers. Every regulated firm is required to have a Complaints Handling Policy (CHP) and consumers are advised that reference to the CHP may be found in its terms and conditions of engagement. A regulated firm s CHP will provide for a 2 stage resolution: Consideration of complaint by a senior firm member or designated complaints handler If the complaint cannot be resolved at step 1, then the complaint should be referred to an independent redress scheme. There are several independent See, for example,

22 redress schemes and the firm s CHP must give details of the redress scheme to which it refers complaints. The RICS itself has very limited powers to investigate: Failure to use a CHP Misuse of clients money Conflicts of interest Failure to answer correspondence A conviction of a criminal offence If the RICS do investigate a complaint on any of these bases, then they will decide as a preliminary matter whether the information provided by the consumer indicates that the member firm may have breached RICS rules and regulations. Their tone differs from that of, for example, LeO. They stress, for example, that: Your complaint is important to us as we want to ensure that RICS Members and Regulated Firms are operating within the Rules and Regulations. At the same time any complaint is a criticism of their professionalism and we must ensure that it is justified. If they decide that further investigation is required they can request documents from both parties. The investigation will be done as quickly as possible, but no time limits are set. If the investigation team believes a member of firm has breached RICS rules and regulations (and that they have been able to gather sufficient evidence of the alleged breach) then the RICS will refer the matter for disciplinary action. This action may include: Closing the case Negotiating a consent order with the member or firm this can agree restrictions for a period or impose a fine/ make an order re costs Referring to a RICS Disciplinary Panel (usually in public) They cannot: 22

23 Investigate complaints against anyone who is not an RICS member Determine whether a member firm has acted negligently Interfere with or become involved in court action against a member firm Pay compensation or instruct a member firm to do so. The Complaints Handling Procedure 38 provides that the CHP must include a redress mechanism that is approved by the Regulatory Board. RICS maintains a list of approved redress providers. One such approved redress provider is Ombudsman Services 39 who have a list of RICS providers 40 who have nominated their redress scheme. Ombudsman Services will consider complaints against registered members by individuals. The individual must have exhausted the internal CHP and the member firm has eight weeks to resolve the complaint internally. They will consider a complaint within nine months of the date of the first complaint to the firm/ company. Complaints might include: An apparent breach of obligations Unfair treatment Avoidable delays Failure to follow proper procedures Rudeness or discourtesy Not explaining matters Poor or incompetent service This Ombudsman cannot investigate: Complaints they consider to be malicious or unjustified 38 Guidance for RICS Firms Version 2 with effect from 01 February

24 Disagreements between the companies that participate in the Ombudsman s service Complaints that are already being dealt with by the courts or other complaints procedures Firms or companies which have not joined their service. The powers available to Ombudsman Services (Property) include ordering an apology or explanation of what has gone wrong, practical action to correct the problem, recommendations to a firm to avoid similar problems in future, and a financial award up to 25,000. Architects What legal services are being offered and under what operating models? Many architects provide advice on the serving of party wall notices and on planning permission. They may even become involved in the initial stages of a dispute. What redress mechanisms are available (if any) in these services? What powers are available to the complaint handler? Chartered Architects RIBA Most, but not all architects are members of the Royal Institute of British Architects (RIBA). These members are entitled to call themselves Chartered Architects. RIBA directs a consumer to the Architects Registration Board (ARB) in relation to complaints, but also stresses that a Chartered Architect must conduct him/herself in accordance with both the ARB and RIBA Codes. RIBA therefore has a separate, additional complaints process for a RIBA registered architect and will consider complaints against RIBA members for breach of the RIBA Code. RIBA themselves acknowledge: Difficulties can arise when insufficient information has been provided and there is an incomplete understanding of the architect's role and responsibilities in design, planning and construction processes. Incorrect 24

25 assumptions about the architect's role and duties in a project can lead to disputes 41. They have produced a document titled It s useful to know...guidance to help understand the architect s role in a building project and what happens if things get difficult 42. They encourage architects to be up front and clear with the client about their role. They encourage mediation and adjudication of disputes and set out the small claims limit where litigation may be necessary: as a last resort, they caution. Architects - ARB The ARB is a government established body tasked with regulating architects in the UK. They can consider complaints about a registered architect (it is a criminal offence to offer services as an architect without being on their register). They cannot: Order the architect to put right something that has gone wrong or award compensation for poor service Become involved in disputes about a contract or fee levels, or if the architect has been negligent. All of these are matters for the court Make the architect apologise. The ARB will only therefore consider unacceptable professional conduct or serious professional incompetence. Once information is received from the complainer and the architect the complaint is considered by an Investigations Panel. This is a 3 member panel 1 architect and 2 lay. The Panel has power to: Dismiss the complaint Give the architect advice about their future conduct Refer the complaint to the Professional Conduct Committee (PCC) for a full hearing. (The PCC can reprimand/ fine/suspend/ remove from register. The Panel try to reach a decision within 12 weeks of receiving it ers.aspx 42 October

26 Estate Agents What legal services are being offered and under what operating models? Estate agents may give consumers advice on planning, disputes and even the technicalities of the sale process when does this become legal advice? This can be confusing for the consumer where there are organisations consisting of connected services or business. For example, Bridgfords 43 are part of the Countrywide group and offer estate agency services; Countrywide also offer conveyancing services. From a consumer perspective the lines between service delivery may not be clear, regardless of any regulatory separation. What redress mechanisms are available (if any) in these services? What powers are available to the complaint handler? Unless an estate agent is already regulated as an authorised person (for example by the SRA) and therefore exempt, it must be registered with an OFT approved 44 redress scheme either the Property Ombudsman 45 or Ombudsmen Services, Property 46. The Property Ombudsman can consider complaints against a registered estate agent member where the complainant has already submitted a written complaint to the organisation and 8 weeks have passed from the date of that complaint, without the complaint being resolved. The Property Ombudsman can deal with unfair treatment, inefficiency and undue delay, breach of law, failure to fulfil obligations under any Code of Practice to which they subscribe, where there has been a financial loss to the consumer or avoidable aggravation suffered, distress or inconvenience. In terms of complaints they cannot deal with, most exclusions are procedural eg where a complaint is being or has been dealt with by a court, where the estate agent is not registered with the Ombudsman, where complaint relates to a survey/ valuation / mortgage or a solicitor