Complaints: 57% of CLC firms have generated no ombudsman referrals in last three years
The Council for Licensed Conveyancers (CLC) is planning to ratchet up the financial pressure on the firms that fail to handle complaints properly.
Its annual consultation on its fees and charges proposes making the minority of firms that generate complaints to the Legal Ombudsman (LeO) pay 50% of the cost, rather than 30% as now.
In 2022, the CLC became the first and so far only regulator to introduce a ‘polluter pays’ element to how it pays the compulsory levy that is spread across the regulated community to pay for LeO.
By separating it the levy from its annual practice fees, the aim was to increase the transparency of the charge, which was increasing significantly year on year, incentivise better complaint handling, and allocate some of the cost based on usage.
In the last financial year, the CLC had to pay £1.2m for LeO – 70% of it was paid by all firms to recognise the collective benefit of the service, with 30% allocated to practices as a ‘usage’ charge based on the number of cases accepted for investigation by the ombudsman.
However, 57% of practices have had no cases accepted for investigation in the last three years.
The consultation indicates that the number of complaints about CLC-regulated firms reaching LeO has gone up in recent years, from 179 in 2018/19 to 466 in 2022/23, before falling to 413 in 2023/24.
The consultation proposes moving the split to 50/50 so as to provide a stronger incentive for the small number of firms that generate disproportionate levels of referrals to LeO to reduce them.
As a result, 63 of the 85 practices with cases at LeO will actually pay slightly less than they currently do – as the reduction in the profession-wide charge will offset the increase in usage charge – while the other 22 practices will pay more.
According to the consultation, one firm will have to pay an extra £35,000 as a result but for 17 of those 22 firms, the extra cost will be less than £2,000.
When the approach was announced back in 2021, the CLC said its long-term plan was to make the firms generating complaints responsible for 80% of the levy.
The consultation also proposes a 9% in increase in practice fees for the second year running, after a period between 2017 and 2022 where they fell by 60% as the regulator returned excess reserves back to the profession and operated a deficit budget.
It said reserve levels were now at a level the CLC needed to maintain, and so full operating expenditure had to be charged back to firms.
The CLC has meanwhile faced both rising costs and falling practice turnovers as a consequence of the pandemic and subsequent economic downturn – aggregate practice turnovers fell by 4% in 2023 and a further 1% in 2024. As practice fees are based on turnover, this has meant lower income for the CLC.
The CLC said it was also being required to undertake more activity, such as enhanced anti-money laundering supervision and responding to more prescriptive regulatory requirements from the Legal Services Board and other stakeholders.
The 9% rise is equivalent to 6p per £1,000 of turnover, it said, and will generate a budget of £2.78m.
The CLC is not proposing to change any other fees, meaning that individual licence fees will remain at £400 (for either conveyancing or probate) or £475 (for both), the level they have been at since 2010. Compensation fund contributions were last amended in 2020, when they were reduced by 60%.
CLC chief executive Sheila Kumar said: “The CLC has worked hard over several years to absorb rising costs, recognising that times have been tough for conveyancers. The executive team has worked closely with the CLC council to balance the need to maintain its regulatory approach and accommodate changing levels of expectations of regulators.
“However, we believe that now is the time to invest to ensure that our high standards of consumer protection and promotion of the public interest endure while continuing to provide the regulatory system that specialists appreciate.
“We first split the cost of the Legal Ombudsman levy in 2022, so that those generating more complaints bore more of the burden, and this year marks the first step of our stated goal of increasing the share that is met by practices originating disproportionate levels of complaints.
“We believe this is equitable and should also act as a strong incentive for firms to ensure they deal with complaints quickly and fairly.”
The consultation runs for eight weeks and closes on 6 September.
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