Thousands of people are being ripped off by unregulated claims management and will-writing companies with no legal recourse, it was claimed today.
In his first report to Parliament since his office was set up in 2010, the Legal Ombudsman called on the Government to take urgent action to ensure consumers are not left confused and vulnerable by unregulated companies.
Consumer organisation Which? and the Law Society backed the claims and called for more protection for customers.
They say the increased bundling together of legal services with financial services and other products, including more being offered via the internet, poses serious dangers for consumer protection.
Unregulated will-writing firms
Chief Legal Ombudsman Adam Sampson says: "One service which crops up a lot is will-writing. It's a service carried out often by will-writing firms who aren't regulated.
"Because of this, customers are left with little means of redress when things go wrong.
"We've seen similar confusion about claims management companies, with lots of consumers believing they're getting a legal service even though most of the work is carried out by a non-authorised person. Again, we can't help."
Which? executive director Richard Lloyd says: "Which? undercover investigations into both will-writing firms and claims management companies have revealed examples of poor practice.
"As the legal-services market continues to grow in both size and complexity, it's crucial that consumers who have paid for a legal service that's not up to scratch know where to turn to get help.
"We want the Government and regulators to wake up to the current lack of clarity and to provide a clear and straightforward route of redress for consumers.
"The arrival of a legal-services market in which consumers will, potentially, have complaints about 'hybrid' services poses some serious questions about who they'll be able to turn to for help."
Gap in regulations
Des Hudson, chief executive of the Law Society for England and Wales, says: "The gap in regulation which allows unregulated cowboys to operate in areas like will-writing does not just cause unfair competition to solicitors, who provide a regulated, professional service.
"It is also damaging to consumers because the unregulated providers are not insured, do not provide a compensation fund and are not covered by the Legal Ombudsman's scheme for consumer redress."
A Ministry of Justice spokeswoman says: "Will-writing is an important issue. We welcome the Legal Services Consumer Panel's detailed report into the subject and will await the outcome of the Legal Services Board's ongoing work."