Is your documentation up to date?
It is important that we regularly review our documentation such as our Client Care letters, Terms of business, websites etc., to ensure that we are keeping on top of all the regulatory changes.
Last year one of the prominent changes was the application by the Legal Ombudsman to become an approved consumer Alternative Dispute Resolution (ADR) for the purposes of the EU Directive. The purpose of the Directive is to ensure that all consumers in the EU have access to an ADR scheme to seek redress where they have experienced problems with goods they have purchased.
On 28th August 2015 the Legal Ombudsman withdrew their application made to the Legal Services Board. A period of consultation followed this and on December 8th the Legal Ombudsman decided that they would not be resubmitting their application to become an approved/certified ADR.
What does this mean for you as a firm? You must ensure that once the client has exhausted the firm’s internal complaints procedure (the First Tier complaints process) and the complaint has not been settled, that you provide the client with the following information on a durable medium.
The client has six months from the date of this final letter to complain to the Legal Ombudsman.
Please use the address and contact details below:
Complaints Body – The Legal Ombudsman,
PO Box 6806
Wolverhampton
WV1 9WJ
Website – www.legalombudsman.org.uk
You will then need to choose one of the following approved ADR providers; Legal Ombudsman Services, ProMediate and Small Claims Mediation and the website to include in your final letter to the client and confirm whether you as a firm agree to use the approved ADR provider.
Firms must remember that if the Legal Ombudsman resubmits its application to become an approved ADR then they may need to make changes to their Terms of Business in order to incorporate any changes which will come about as a result of this.
Online Dispute Resolution (ODR)
The EU Online Dispute Resolution (ODR) regulation came into force in the UK in 2015.
The purpose of the ODR platform is to allow consumers who have purchased goods or services online, a legally binding agreement sent by the law firm to a client via email, to submit a complaint online which can then, if necessary, be considered by a trader in another EU member state. This in turn will encourage those trading to feel more confident in doing so knowing there is a redress mechanism in place.
This only applies to consumers and not business to business contracts. This requirement does not apply to online traders who do not have a website.
What this means for you as a firm? There is a requirement in the regulations that from the 15th February 2016 (previously 9th January) a firm must provide on their website a link to the ODR Platform and also an email address for their firm. This applies to all firms irrespective of whether they market products or services to consumers in another EU Member State.
Please note that the address for the ODR platform has not yet been provided so firms will not be able to display information until such time as this is known.
Financial Services Compensation Scheme (FSCS)
As of the 1st January 2016, the £85,000 FSCS limit for each individual client reduced to £75,000.
The previous limit of £85,000 was set in 2010 by the Deposit Guarantee Schemes Directive as this was the equivalent of €100,000 at the time. This was reviewed in July 2015 using the exchange rate at the time and the new equivalent of £75,000 was set.
The FSCS limit applies to large businesses, small local authorities (parish councils etc.,) and smaller charities.
The new limit will remain in place until 2020 when this will be reviewed again.
Consumer Credit Regulations
On 4th December 2015, the SRA announced that their new model for consumer credit regulation had passed its final hurdle.
The new model which will come into effect on the 1st April 2016 allows those firms who carry out consumer credit work as an integral part of the legal services they provide to be regulated by the SRA rather than both the SRA and the Financial Conduct Authority (FCA), thus reducing the burden on firms overall.
As a firm you will need to assess whether you need to be regulated by the SRA or be dual regulated before April 2016.
You will be pleased to know that the SRA has produced a toolkit to help firms determine whether the work the firm undertakes is covered by the SRA’s regulatory arrangements or whether they need to apply to the FCA. Please use the link below for further information.
http://www.sra.org.uk/solicitors/code-of-conduct/financial-services-rules/regulation-consumer-credit-activities.page#slide-9
Ayishah Khalil
Legal Eye Ltd
For further information please contact:
Loschinee Naidoo
Senior Compliance and Risk Management Specialist
Legal Eye Limited
(Subsidiary of ULS Group)
