Complaint Handling Reforms – Is Your Firm Ready?

In June 2026, the Office for Legal Complaints (OLC), the body responsible for the Legal Ombudsman (LeO), launched a wide-ranging consultation on reforms intended to manage what it has described as unprecedented demand for the service. You can read the announcement in full here: OLC sets out significant reforms to help meet unprecedented demand for LeO.

The consultation, which runs for 12 weeks until 2 September 2026, proposes targeted changes across three areas: the LeO Scheme Rules, the way case fees are charged, and the approach to publishing ombudsman decisions. The combined focus aims to encourage earlier resolution, reward firms that handle complaints well, and ensure the service remains sustainable as demand continues to climb.

The need for change has been spurred by rising complaint levels, which increased by 37% in 2025/26 alone. Consumer dissatisfaction has been driven by a combination of changing consumer expectations, problems with first-tier complaint handling at firm level, and wider societal trends, including the growing use of artificial intelligence tools. The OLC also confirmed that an externally led review of the Ombudsman’s operating model is planned for 2026/27 to address the longer-term picture.

We covered the growing scale of the problem in an earlier article, asking whether firms were structurally ready to cope: Legal Ombudsman Complaint Numbers Reach Record High: Is Your Firm Set Up to Handle Them? The latest reforms make that question more pressing, not less.

What is the OLC Proposing?

The proposals are focusing on three key areas where more immediate action can be taken:

• Scheme Rules – targeted changes to support clearer expectations, more proportionate decision-making and faster resolution. This includes requiring clearer articulation of the impact of poor service, introducing a 12-year longstop for complaints, and reducing unnecessary escalation to ombudsman decisions where investigator findings are sufficient.
• Case fees – a revised model for charging case fees which introduces differentiated case fees, alongside additional charges for providers who have not provided a final response as part of the first-tier complaints process. The approach is designed to incentivise earlier resolution and better complaint handling, while maintaining free access for consumers.
• Publishing decisions – making the necessary changes to the current publication policy to support a move towards publishing more ombudsman decisions in the future.
  The proposals are informed by LeO’s experience of complaint handling across the legal sector, including evidence that one in four customers who escalated a complaint say they have not received a final response from their service provider – something which prevents early resolution and increases pressure on the scheme to resolve the complaint through a full investigation.

In detailing the need for reforms, Chair of the OLC, Ric Blakeway, said:

“Legal services are operating in a changing and challenging environment and high-profile events have shaken consumer confidence. Fragile trust is reflected through unprecedented demand to the Legal Ombudsman. This amplifies the call for a transformation in complaint handling, by both the legal sector and LeO itself.

“This consultation seeks to encourage a shift in culture and ensure complaint handling across the sector consistently meets the standards consumers would expect.

“These proposals are also about ensuring LeO is operating as efficiently and effectively as possible, while reducing avoidable demand and strengthening accountability within the sector. Improving how complaints are handled at source is critical – both to delivering better outcomes for consumers and to building confidence in legal services.”

Chief Ombudsman, Phil Cain, said:

“The scale and pace of rising demand present a significant challenge for LeO’s current operating model, and we need to ensure we are maximising our operational capacity and focusing our resources where they can have the greatest impact.

“These proposals introduce stronger incentives for legal providers to engage with complaints at first tier and resolve them at the earliest possible opportunity. They also ensure that those providers who are not handling complaints effectively – and are therefore generating the greatest demand – contribute more towards the cost of the service.”

More information on LeO’s transformation plans can be found in the 2026-27 Business Plan.

Improving Responses to Consumer Complaints

One of the key figures in the announcement focuses on responses to consumer complaints. The OLC reported that one in four customers who escalated a complaint say they never received a final response from their service provider. That gap prevents early resolution and pushes more cases into full investigation, which is precisely what the new case fee structure is designed to discourage.

Making sure every complaint reaches a clear first-tier response is one of the areas our Outsourced Complaint Management Service is built to handle.

Any changes to the Scheme Rules or case fee arrangements would still require approval from the Legal Services Board and, where applicable, the Lord Chancellor, before they take effect. However, some form of change is likely. Firms that resolve complaints promptly and properly at first tier will be better placed, both reputationally and financially, than those that do not.

Complaints Are More Than an Admin Task

Complaint handling often gets viewed as a necessary inconvenience. Something to “deal with” between fee-earning work.  

In reality, it sits squarely within a firm’s regulatory obligations. The SRA expects firms to deal with complaints promptly, fairly and transparently. The Legal Ombudsman expects structured engagement and evidence of proper investigation. And clients, understandably, expected to be taken seriously.

You can also access further guidance from the Law Society on handling complaints here: Client Care – Handling Complaints.

The Regulatory and Commercial Risk of Poor Complaint Handling

Where firms struggle isn’t usually the intent. It’s the time, resource, and objectivity.

Dealing with a complaint diverts senior fee earners from billable work, can strain internal relationships, and if the response is slow or defensive, escalation becomes much more likely.

Slow response times and inefficient handling of a complaint can cause further frustration and increase the risk of the complaint being escalated to the Legal Ombudsman or the SRA.

Under the OLC’s proposals, that risk now carries a clearer financial consequence. With differentiated case fees and additional charges aimed at firms that fail to issue a proper first-tier response, weak complaint handling could soon translate into direct and avoidable cost, on top of the reputational exposure that comes with a published decision.

Handling Complaints In-House, Control or Constraint?

For many firms, there is a natural instinct to keep complaint handling in-house. It feels more controlled, appears cost-effective, and the service seems more efficient.

However, in practice, it is often more complicated.

Senior staff or compliance officers already juggling heavy workloads are asked to investigate, which may result in delayed responses or investigations that lack the necessary depth. The individual reviewing the complaint may know the fee earner involved, or may have worked on the matter themselves, meaning that complete impartiality can be difficult. Even with the best intentions, independence can be questioned.

Then there is timing. Efficient complaint handling needs momentum. If complaints sit in a queue behind billable work, frustration grows. Clients escalate not always because the original issue was severe, but because they felt unheard or forgotten about.

That is a pattern we see repeatedly, and it is exactly the kind of avoidable escalation the OLC’s reforms are designed to reduce.

As complaint volumes increase across the profession, firms must consider whether their current structure is sustainable, not just compliant on paper.

Why Firms Are Turning to Outsourced Complaint Support

Whilst most firms receive very few complaints, the handling of them is a cost which cannot be recovered, and they are an unfortunate diversion for senior staff and fee earners. Firms that choose to outsource complaint handling isn’t about losing control, in many cases, it restores it.

Clients frequently respond more constructively when an independent expert is involved. The presence of a neutral third party can reduce emotion and encourage early resolution.

For smaller firms without dedicated compliance infrastructure, outsourcing adds capacity and expertise. For larger firms, it frees up senior professionals to focus on operational delivery rather than non-recoverable investigations.

And perhaps most importantly, it reduces the likelihood of escalation.

Managing Complaints Effectively in 2026

With complaint numbers at a record high, firms should consider reviewing:

• Whether their complaints policy reflects current SRA guidance and transparency rules
• Whether response times are monitored and documented
• Whether investigations are demonstrably impartial
• Whether root cause analysis is undertaken to prevent recurrence
• Whether senior management oversight is properly evidenced

Complaint handling is not a tick-box exercise. It should form part of a wider compliance and risk management framework.

Done well, it protects reputation and strengthens client trust. Done poorly, it becomes a gateway to regulatory scrutiny.

Why Law Firms Are Choosing RACO’s Complaint Management Service

The Regulation and Compliance Office has designed a Complaint Management Service to deliver to firms an outsourced, independent, and efficient way of managing complaints. We cover the full lifecycle of a complaint, from first notification through to investigation and client engagement to final resolution.

The assistance of an external expert who specialises in the handling, management and resolution of complaints is both a cost-effective and focused way of ensuring any complaints received by your firm are resolved effectively.

What this means in practice:

• Fee earners stay focused on delivering legal services
• Complaints are addressed promptly and proportionately
• Investigations are impartial and structured
• Escalation to the Legal Ombudsman is actively managed, and often avoided
• Should the matter proceed to the Legal Ombudsman, we will manage this to the final conclusion (if required)

Access detailed information on this service by downloading our brochure here:

RACO Complaint Management Service

Get In Touch 

To ask any questions about the Regulation and Compliance Office and how we can support your Law Firm, please call us on 0203 985 8550, complete the online enquiry form, or email us info@regulationandcomplianceoffice.co.uk