Thousands of people are being ripped off by unregulated claims management and will-writing companies with no legal recourse, it has been claimed.
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 said the increased bundling together of legal services with financial services and other products, including more being offered via the internet, posed serious dangers for consumer protection.
Chief Legal Ombudsman Adam Sampson said: "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 said: "Which? undercover investigations into both will-writing firms and claims management companies have revealed examples of poor practice.
"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."
Des Hudson, chief executive of the Law Society for England and Wales, said: "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."
