Legal Ombudsman 6.5% Budget Constrained, Cases Wait Up to 390 Days

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A reined-in legal ombudsman has vowed to make do with the reduced budget increase it has been allowed – but warned there will be consequences for how quickly complaints can be handled.

As reported by the Gazette last month, the Legal Services Board blocked an application by the Office for Legal Complaints for an 11% budget rise, which would have taken its funding to £22.2m in 2026/27. The final approved increase was 6.5%, giving the complaints handler a budget of £21.3m with which to handle a wave of complaints expected to come through in the next year.

In its revised business plan published this week, the OLC forecast it will receive more than 17,500 complaints about firms and lawyers in the next financial year – an annual increase of 25% - and 174% higher than in 2019/20.

The ombudsman said it is experiencing such sustained and accelerating demand for its help that the picture has changed even since it published its business plan and budget consultation last November.

The pared-down increase will have direct consequences, the OLC warned. The number of complaints that should be resolved in 2026/27 will be 11,047 rather than 11,862, while a backlog of more than 6,700 complaints would be waiting for investigation by the end of the year. The ombudsman had planned on keeping this to less than 5,000.

Wait times for cases to be resolved will shoot up to 390 days by the end of 2026/27, rather than the 330 days aimed for under the higher funding.

LeO said it will try to mitigate these risks in the forthcoming year but the lack of additional operational capacity ‘inevitably limits’ its ability to control the growth of backlogs and customer wait times in the short term.

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OLC chair Richard Blakeway and chief ombudsman Phil Cain said: ‘The LSB recognised that the 6.5% increase will see customer wait times and backlogs increase – but LeO will do everything it can within the agreed budget to minimise this impact. The LSB also recognised the urgent need for LeO to transform its operating model, approving critically important additional funding for this work.’

Demand is expected to grow significantly for several reasons. The ombudsman said clients have a greater propensity to complain and the service is starting to see the use of generative AI in complaints. LeO has also seen its first contact from consumers unhappy with the service received from law firms in cases relating to unfair car finance commission, including complaints from those unaware they had entered into agreements with a legal provider, and complaints about exit fees.

At present, the majority of the ombudsman's budget is recovered from a levy on the whole profession, which is adjusted each year. The remainder is covered by a £400 charge on firms for complaints resolved in the client's favour where they did not take all reasonable steps to resolve a complaint.

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