Act paves way could also financial companies to team up with law firms

An independent body which will handle consumer complaints about legal services in England and Wales is now a step closer under new legislation approved today.

The independent Office for Legal Complaints, introduced under the Legal Services Act which received Royal Assent today, will remove complaints handling from lawyers and establish a new ombudsman scheme as a single point of entry for all consumer legal complaints.

The new body is part of radical reforms which will see services in the £20 billion legal sector undergo major changes to bring them in line with other professional services in the 21st century.

The Act also introduces an independent oversight regulator, the Legal Services Board, whose members will be recruited shortly.

Its provisions also enable greater consumer choice and flexibility in legal services by removing disproportionate restrictions on business structures, allowing lawyers and non-lawyers to set up businesses together for the first time ever, and enabling services in develop in new, consumer-friendly ways.

The new measures in full are:

* A single and fully independent Office for Legal Complaints (OLC) to remove complaints handling from the legal professions and restore consumer confidence.

* Alternative Business Structures (ABS) that will enable consumers to obtain services from one business entity that brings together lawyers and non-lawyers, increasing competitiveness and improving services. The Act will also allow legal services firms to have up to 25 per non-lawyer partners in the near future, before the full ABS regulatory structure is implemented, and will allow different kinds of lawyers to form firms together in the near future.

* A new Legal Services Board (LSB) to act as a single, independent and publicly accountable regulator with the power to enforce high standards in the legal sector, replacing the maze of regulators with overlapping powers. The chair of the Board will be a lay person.

* A clear set of regulatory objectives for the regulation of legal services which all parts of the system will need to work together to deliver, including promoting and maintaining adherence to professional principles.

These reforms come after long and careful research and consultation, with input from a large cross-section of people, including the Office of Fair Trading, consumer organisations, the legal professions, and consumers themselves.

Legal Services Minister Bridget Prentice said: "After the huge amount of work that's been put in, I'm extremely pleased to see these reforms becoming law. The Act will mean consumers get legal services that are fit for purpose, increasing confidence in the system as a whole.

"These reforms are all about fairness to consumers, who will benefit, for example, from the new and independent OLC handling complaints about legal service providers and ensuring a quick and fair response.

"The new law also enables lawyers and non-lawyers to set up in business together, giving consumers a chance to get both legal and other services from a wide new range of providers. Some forms of alternative business structures, like legal disciplinary practices with up to 25 percent non-lawyer managers, will be able to emerge in the near future to enable consumers to get the benefit of the new changes as soon as possible.

"The Legal Services Board will replace the existing regulatory maze to oversee approved regulators. These regulators will also be required to separate their regulation side from their representation one to remove conflict of interest."