Legal Ombudsman seeks 12% budget increase to tackle growing complaints and service pressures
The Legal Ombudsman (LeO) has recommended a substantial 12.1% increase to its budget for the coming year in a bid to manage escalating complaints and to overhaul its operations. The proposed £2.4m budget increase comes amid an ongoing surge in complaints and a recognition that existing systems are struggling to keep up with demand.
In its draft 2026/27 business plan and budget, the Office for Legal Complaints (OLC), which oversees LeO, revealed that the current complaints process is increasingly unable to cope with the scale of cases coming in. As a result, LeO is pushing for a comprehensive review of its operational framework, suggesting a potential overhaul of its case fee system and even considering the introduction of refundable upfront fees.
LeO’s performance has fallen behind its initial projections, with complaints up by 26% year-on-year in 2025 alone. By 2026/27, the Ombudsman expects demand to be 115% higher than pre-pandemic levels. While there has been a 22% drop in wait times from the previous year, the average wait time for all complaints remains 275 days, a troubling statistic for users of the service.
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Residential conveyancing has been identified as a significant contributor to the rising volume of complaints, alongside a growing trend of complaints related to misleading advertising and unfair car finance commission. These emerging complaint drivers, along with increasing AI-generated complaints, are adding to LeO’s workload, further intensifying the strain on its resources.
In response to the Mazur ruling and the increase in complaints, LeO is exploring ways to redefine its service delivery and eligibility rules. The proposed reform of case fees aims to incentivise better handling of complaints at the first-tier level. As part of the process, LeO also proposes adjustments to the way services are accessed, including potentially charging upfront refundable fees.
Elisabeth Davies, Chair of the OLC, noted that despite improvements in processing complaints through early resolution methods, which now handle about half of all cases, there is still a significant backlog of complaints. At its peak, LeO had 5,862 uninvestigated cases in 2021/22, and though the backlog has been somewhat reduced, the original target of 500 to 1,000 cases by March 2024 remains far out of reach.
The OLC’s recommendations include four potential budget increases for 2026/27, with the 12.1% rise being the preferred option. This would help manage the rising complaint numbers while supporting service improvements. The budget increase would facilitate the recruitment of 26 additional staff, allowing LeO to address cases more promptly and continue its work towards system-wide reforms.
While the first two options (lower increases) could stagnate service improvements, the fourth option, which proposes a 17.1% rise to dramatically reduce unallocated cases, is seen as risky due to the scale of recruitment and training required in parallel with a broader transformation.
LeO’s current budget stands at £20m, marking an 11.4% rise from the previous year. However, the increasing number of complaints—especially AI-driven and involving legal services such as residential conveyancing—has shown the need for radical change.
In its draft plan, LeO highlights that the total number of cases handled is expected to exceed 10,000 for the first time next financial year, a sign of increased efficiency. However, reforming the complaints process remains a priority to ensure the public’s trust in the Ombudsman service and its continued ability to resolve legal service disputes.
Davies emphasized that collaboration with the legal sector is crucial for long-term improvements: “Collaboration is key to lasting change. LeO cannot do this alone, and a sector-wide approach to improving service standards and complaint handling is essential.