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The OFT is calling for the legal profession's complaint handling procedures to be further simplified after it published research recently showing that only one in eight (13 per cent) dissatisfied customers goes on to make a formal complaint.

The low level of complaints was found to be largely due to uncertainty about how or where to complain and scepticism about whether complaining is worth the effort.

The research also shows that around 460,000, or one in seven, of the three million people using the UK's legal profession each year are dissatisfied with the service they receive.

The findings form part of wider research commissioned by the OFT to understand how recent changes to the regulation of lawyers, following the Legal Services Act in 2007, have impacted on consumers.

Currently, for complaints not resolved by the provider, the consumer is often asked to distinguish between complaints about the service provided or the conduct of the provider before directing it to the appropriate body. Complaints about the conduct of a lawyer can be sent to one of 10 approved regulators, depending on the legal profession involved.

The Legal Ombudsman currently operates a single post-box system, receiving complaints not resolved by the provider before forwarding them to the relevant statutory body as appropriate. However the system is not effectively signposted by lawyers or easily understood by consumers and the OFT is calling for the system to be actively promoted as standard by all in the sector, including by the other regulators.

 The research also looked at progress in authorising alternative business structures, where legal services can be supplied by a one stop shop as part of a package with other, non legal, services, such as accountancy and property services. The research found approval processes for these new businesses to be slow with only around 70 out of more than 150 applications for non-traditional legal service firms approved to date. The OFT is calling for regulators to speed up the process for approvals and to make sure there are no unnecessary barriers preventing businesses from entering the market to deliver legal services to consumers in new and innovative ways.

Mary Starks, Senior Director of Services, Infrastructure and Public Markets at the OFT, said:

'We are encouraged by the recent reforms, which have improved the regulation of legal services and removed unnecessary barriers to firms offering new business models to consumers. However our research shows that there is still room for improvement. Too many consumers are unhappy with the service they receive, yet are put off pursuing complaints by the complexity of the system.

'A better approach to handling complaints would not only support individual consumers' right to redress when things go wrong - together with competition from alternative providers it would also drive a more customer-focussed approach by law firms, something our survey results suggest is still needed.'

The OFT has invited the legal profession, regulators and consumer groups to a roundtable at the OFT next week to discuss complaints handling and other research findings, with a view to addressing problems in this market.

NOTES

1. Research conducted by the OFT in 2001 found restrictions on the types of organisations that could operate in the legal services market, which restricted entry by new firms and limited competition. In particular restrictions on multi-disciplinary partnerships were identified. The OFT argued that these restrictions on the structure of organisations providing legal services were an unnecessary barrier to entry and expansion within the market. 
2. The Legal Services Act in 2007 introduced independent regulation in place of self-regulation by the professional bodies representing lawyers, an independent complaints handling system, and removed legal barriers to alternative business structures (ABS) entering the market. 
3. Europe Economics was commissioned by the OFT to conduct wide research into the impact of reforms in the legal services market. Read the full report (pdf 3.5Mb) 
4. This research included a YouGov online omnibus survey of 2246 adults living in the UK in November 2012 looking at their satisfaction with legal services and their use of the complaint process. 
5. Since the research was completed in November 2012, the number of alternative business structures approved has increased to around 70.
6. The Legal Ombudsman's jurisdiction is limited to complaints about the service provided. Where complaints are about professional misconduct, jurisdiction lies with the approved regulators and other statutory regulators if appropriate. The distinction between service and conduct may not always be clear to consumers. 
7. The reform of legal regulation is at different stages in Scotland, Northern Ireland and England and Wales. While Scotland has made some moves towards the system adopted in England and Wales, there remain key differences both in terms of the market structure and the regulatory framework. Meanwhile Northern Ireland has experienced limited change in the regulatory framework over the last five-10 years. Chapter 1 of the report gives more detail on the on the different stages of reform across the UK nations.