Compliance Bulletin
LeO complaint time limits and
new requirements for PII
Compliance Bulletin No 35
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July 2015
LeO POSTPONES CHANGES TO COMPLAINT TIME
LIMITS AND NEW REQUIREMENTS FOR PII
Compliance Bulletin 35 – July 2015
LeO Postpones Changes to Complaint
Time Limits
In best "Grand Old Duke of York" fashion the Legal
Ombudsman ("LeO") has announced, just days before it was
due to be implemented, that it is postponing a long-planned
change to its time limits for registering a complaint.
The intention had been that from the 9th July, complainants
would have 12 months to register a complaint with LeO rather
than the current six. That intention has not been carried into
effect. For the time being, therefore, it remains correct to
advise clients that they should approach LeO no later than six
months after the end of the firm's own complaints handling
system. In the interests of completeness it should also be borne
in mind that certain non-clients do qualify for access to the LeO
scheme, personal representatives for the deceased and those
who have been refused a service most notably, but such
instances remain exceptional.
The time limits for all who qualify are a frequent cause of
confusion. First, there is a time limit as to how long the client
has to register a complaint with LeO at all, having first exhausted
in most cases the firm's own scheme. This is set as no longer
than six years since the event in question, or three years since
the complainant should have known about it, and in no case
earlier than the 6th October 2010 (being the date at which the
LeO scheme commenced). With this back-stop provision in
place this first time limit will not be relevant to complaints
received until late next year, but the information should still be
provided for those current clients who might raise such issues in
the future.
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Compliance Bulletin 35
LeO complaint time limits and new requirements for PII
Secondly, and more significantly, the client must refer their
complaint to LeO within six months of being notified of the final
outcome of the firm's complaints handling process. The
Ombudsman does have discretion as to all the time limits are,
however, and is likely to exercise this where the firm has not
provided complete or accurate information as to how to access
the service as required by Outcomes 1(9) and 1(10) of the Code
of Conduct: otherwise the six months rule is likely to be
enforced.
The extension to twelve months to this aspect of the regime will
now occur later in the year and is part of a wider set of
requirements which will have to be addressed under the EU
Directive on Alternative Dispute Resolution ("ADR"). Although
originally these new provisions would have to have been in place
from the 9th July the timescale has been extended to the 1st
October. The aim of the new provisions is make ADR available
for any dispute concerning contractual obligations between a
consumer and a business through a certified ADR body. The new
scheme will not prevent litigation in all such cases but will mean
that ADR must be an option.
Not surprisingly LeO has announced that it is seeking
certification under the new scheme and, if successful, it will then
announce its revised requirements in advance of the provisions
needing to be in place. It is important to stress that the Directive
covers only disputes concerning contractual obligations
between a consumer and a business. Also waiting in the wings
is a related Directive dealing with on-line dealings involving
consumers which is due to be implemented by early 2016, which
we will return to as a topic in the autumn. The likely changes to
the LeO scheme will not be great and in all probability will be
limited to the issue of time limits. This will require changes to
retainers and terms of business and it will also be necessary to
have details of LeO on firms' websites. We will, of course,
provide more information and guidance as soon as we are able.
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Compliance Bulletin 35
LeO complaint time limits and new requirements for PII
PII renewals – beware the new outcome
We are entering the time of year when firms need to start
thinking about PII cover for the coming year. Most are still
operating on policies of 12 months duration commencing on 1
October. All will be aware of outcome (1.8) of the Code of
Conduct which requires indemnity insurance to be in place for
the benefit of clients and preventing any exclusion below the
minimum level of cover required by the Indemnity Insurance
Rules.
There is now, however, a new outcome (7.13) in chapter 7
(management of your business) waiting to trip up the unwary.
Before you go ahead and renew your cover for the same amount
as last year, whether the basic required by the rules or that and
any top-up, it may pay to think hard about exactly how much
cover you really do need. This new outcome which was
introduced on 1 April requires that:
“you assess and purchase the level of professional
indemnity insurance cover that is appropriate for your
current and past practice, taking into account potential
levels of claim by your clients and others and any
alternative arrangements you or your client may make.”
The net effect of this new outcome is that if you get it wrong and
are found to be underinsured, instead of this being a bad
judgement call on your part – it could also be a disciplinary issue.
In 2014 the SRA Board carried out a review of the minimum
terms and conditions and agreed to reduce the minimum level
of cover to £500,000, as well as introduce the new outcome. It
has to be assumed that the SRA’s thinking was that the new
outcome would improve client protection by making firms think
twice before they reduced their cover to the new minimum.
However, the reduction in cover was blocked by the LSB but we
were, nonetheless, left with the new outcome.
Firms should, therefore, be thinking even more closely about
the type of work they do, any planned changes and whether
they need to increase cover. Two further points. First, most
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Compliance Bulletin 35
LeO complaint time limits and new requirements for PII
claims are small and this means that your premium is based
around that fact. Increasing cover may not, therefore, lead to
significant premium increase but could give peace of mind over
the massive rogue claim. Secondly, it is worth bearing in mind
that claims which apparently still top the list in terms of both
amount and value are those involving property matters.
Finally, the SRA has just issued a new discussion paper on further
changes it is thinking about in relation to indemnity cover,
including the possibility of removing entirely the minimum level
of cover. Is this time to start having a serious discussion with
your broker about exactly what you do need?
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