A firm of solicitors has been ordered by the Legal Ombudsman to compensate a transgender client for "misnaming" her.
Details of the case were passed to talkRADIO by a whistleblower working at the watchdog concerned it is pursuing an ideological agenda.
Training guidance later given to staff reveals the complainant was unhappy the law firm addressed her by her birth name.
"The firm had asked her how she wished to be addressed and there was nothing to show she had responded to this,” the guidance stated.
“The firm then chose to refer to the complainant using her birth name throughout a long letter assessing her claim. Following that, she phoned the firm to say she felt disrespected.”
The Ombudsman initially found in favour of the solicitors, concluding its behaviour was “reasonable”.
But the complainant appealed and the Ombudsman overturned its initial ruling.
In a statement to talkRADIO the organisation said: "The Ombudsman determined that the approach taken and the comments made by the firm were not reasonable, as they did not demonstrate an understanding of the issues faced by their client, or their circumstances."
A message on the Ombudsman's in-house intranet informed staff: "The decision concluded that the firm should pay the complainant compensation to recognise the emotional impact of their service failing and recommended that they consider their approach, procedures and knowledge in relation to transgender matters."
Transgender campaigner Debbie Hayton said: "If they were working with the best of intentions, it seems a little harsh to censure them for that.
"Gender reassignment seems to be a particularly sensitive issue at the moment. You would hope the legal system would be able to rise above that."
The Equality Act 2010 provides that gender reassignment is a characteristic upon which it is unlawful to discriminate.
The complainant has praised the Ombudsman for their decision: "Thank you so very much for your understanding around trans issues and the journey that I am on. I wish more people were like you," she said.
Concerns have been raised that a US-based media lobby group was cited in the Ombudsman's ruling.
A quote from the Gay and Lesbian Alliance Against Defamation read: “When a transgender person has transitioned and is living their life as their authentic self - that is their truth. The world now sees them as who they truly are.”
Debbie Hayton added: "To cite a non-governmental organisation in another jurisdiction in a case in England and Wales seems to be very peculiar because I'm not aware that is normal practice."
In statement the Ombudsman said: "The quote from GLAAD served to contextualise and illustrate the decision made by the ombudsman – it was not a determining factor in the ombudsman’s decision."