The Ombudsman's final decision:
Summary: A CAB adviser complained on behalf of Ms X that the Council failed to properly manage her finances after becoming an appointee. She says this mismanagement resulted in employment support allowance and housing benefit overpayments of more than £12,000. The Council failed to notify the Department for Work and Pensions of changes to Ms X’s circumstances and failed to spend the benefit in Ms X’s best interests which were its duties as appointee. The overpayments of benefits would not have occurred if the Council had acted correctly as appointee.
- A CAB adviser, on behalf of Ms X, complained the Council failed to properly manage her finances after becoming an appointee resulting in overpayments of housing benefit and Employment Support Allowance (ESA).
- Ms Y says Ms X has repaid more than £10,000, with a debt still outstanding, and this is still causing financial hardship.
The Ombudsman’s role and powers
- We investigate complaints about ‘maladministration’ and ‘service failure’. In this statement, I have used the word fault to refer to these. We must also consider whether any fault has had an adverse impact on the person making the complaint. I refer to this as ‘injustice’. If there has been fault which has caused an injustice, we may suggest a remedy. (Local Government Act 1974, sections 26(1) and 26A(1), as amended)
- If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)
How I considered this complaint
- As part of the investigation, I have:
- considered the complaint and the documents provided by the complainant’s representative;
- made enquiries of the Council and considered the comments and documents the Council provided;
- discussed the issues with the complainant’s representative;
- sent my draft decision to both the Council and the complainant’s representative and invited their comments.
What I found
- In 2012, Social Worker A completed a referral form to the Council’s Estates Team regarding Ms X’s finances. She raised concerns about Ms X’s vulnerability to exploitation and requested it take over control of her finances. The Estates Team accepted the referral and applied for an appointeeship with the Department of Works and Pensions (DWP).
- The Council immediately applied for benefits on behalf of Ms X and the award resulted in a back payment of over £3000. A bank account was opened by the Council on behalf of Ms X in May 2012. The Council then set up payments to ensure all Ms X’s bills were paid on her behalf. It also arranged for Ms X to collect a cash amount each week to meet her personal expenditure. It was agreed that requests for additional money would be made via the social worker.
- The information provided, including bank statements and case notes, show the Council continued to pay all Ms X’s bills. The case notes record the times Ms X requested additional money. The notes show this was mainly to buy gifs for family and friends. There is very little evidence of Ms X requesting money to buy clothes or household items.
- When interviewed all three social workers who worked with Ms X in this period reported that Ms X rarely requested additional money. They said her mental health and low self esteem meant she did not consider herself deserving of items. All three spoke of incidences when they tried to encourage Ms X to spend money but she was reluctant to do so.
- Social Worker A spoke of an occasion when she took Ms X to a budget clothes shop to buy underwear and pyjamas. She said that while waiting in the queue to pay, Ms X returned the underwear and did not purchase it. They did buy the pyjamas but when they were in the car Ms X said she wanted to return them. The social worker had to persuade Ms X to take them home and try them on.
- Social Worker B spoke about Ms X being very fixed in her beliefs and that she was not just concerned about money but also about waste. The social worker told me Ms X would only flush the toilet once a day. She said this was not about money but about waste and Ms X’s self esteem.
- Social Worker C told me of a time when a woman persuaded Ms X to swap shoes with her because her shoes had holes. When the social worker found out she offered to go shopping with Ms X for a new pair but Ms X declined. The social worker arranged for some extra money for Ms X so she could buy herself some new shoes but she did not use it for this purpose. In the end, care staff at Ms X’s home gave her shoes without holes.
- As appointee, the Council had a duty to report all changes of circumstances that could affect benefit entitlement. This would include providing information about the level of savings. In Ms X’s case, the Council did not notify the DWP when her savings passed the lower threshold of £6,000. There is no evidence to show the Council contacted the DWP at any time before July 2015 to notify it of an increase in Ms X’s savings.
- Between May 2012, when the Council first became the DWP appointee for Ms X, and December 2014, the balance of Ms X’s bank account increased to over £16,000. This is the upper savings threshold for several benefits including ESA and housing benefit. This means that once savings are above this level, a person has no entitlement to these benefits.
- In November 2014, the Council completed a new housing benefit claim for Ms X when she moved to a new tenancy. Ms X was in receipt of ESA which is a passported benefit for housing benefit. This means she did not have to provide details of income and capital in order to be awarded housing benefit. However, the officer noted Ms X’s savings were £15,743 and made an informal note to review the level of Ms X’s capital the following year. There is nothing to suggest information was passed to the social worker or Ms X about the level of her savings at this time or the implications if savings increased to over £16,000.
- The Council completed a review of Ms X’s capital in July 2015. It noted her savings exceeded £16,000 and notified the DWP. In response to my enquiries the Council says the DWP did not act on this information until November 2015 when it sent notification it had ended Ms X’s entitlement to ESA. However, the bank statements provided to me indicate the last payment of ESA was received into Ms X’s bank account in July 2015.
- In December, the housing benefit department claimed an overpayment of £7,750.94. The Council immediately paid this amount from Ms X’s savings. This action reduced Ms X’s savings to £8,460 and so both housing benefit and ESA were reinstated at this time.
- Social worker C, who was Ms X’s social worker at this time, did not recall receiving any notification about these significant changes to Ms X’s income. No information was provided to her about her entitlement to ESA and housing benefit ceasing or about the large overpayment taken from Ms X’s savings. The Council has not provided any information to show it explained to Ms X what had happened.
- Beginning in 2017, the Council began working with Ms X to give her more control over her finances. It allowed her to take responsibility for one bill at a time giving her extra money each week to make the payments. In May 2018, the Council relinquished the appointeeship and Ms X was given back control of her finances. At this time £12,718.57 was transferred to Ms X.
- The Council took over control of Ms X’s finances in May 2012. This came after a social worker made a referral. The referral document details Ms X’s situation, her medical diagnosis and the fact she was at risk of financial exploitation. Based on this referral, the Council made a successful application to the DWP to become Ms X’s appointee. I find no fault in how the Council made the referral or the process it followed to become the appointee.
- Once the Council became the appointee it took on certain obligations. The Government’s website details the responsibilities of an appointee stating an appointee must:
Sign the benefit claim form;
Tell the benefit office about any changes which affect how much the claimant gets;
Spend the benefit (which is paid directly to the appointee) in the claimant’s best interests; and
Tell the benefit office if you stop being the appointee.
The website also says “if the benefit is overpaid, depending on the circumstances, you could be held responsible.”
- The evidence seen shows the Council did not fully carry out its responsibilities as appointee in this case. It failed to tell the DWP about changes which affect how much the claimant gets and failed to spend the benefit in the claimant’s best interests.
- Benefit rules on capital (savings) require a claimant to declare any savings they have. The first £6,000 does not affect entitlement. Amounts between £6,001 and £16,000 will affect the amount received. If you have over £16,000 you will not receive any benefit. For Ms X, this capital rule affected her entitlement to housing benefit and ESA.
- Savings between £6001 and £16000 is treated as providing income, this is known as “tariff income”. Tariff income applies at a rate of £1 for every £250, or part of £250, on savings over £6,000. So as Ms X’s savings increased the Council, as appointee, had a duty to notify the DWP. This would have reduced the amount of benefit received. For example, when Ms X’s savings increased to £12,000 this would create a tariff income of £24 per week. When her savings increased to £16,000 this would create a tariff income of £40 per week.
- I have seen copies of bank statements for the period the Council was Ms X’s appointee. This shows that Ms X’s savings first went over £6,000 in February 2013. They continued to increase and by the end of December 2013, Ms X had over £10,000 in savings. Ms X’s savings went over £16,000 in December 2014.
- There is no evidence the Council told the DWP of Ms X’s increased savings at any point from April 2012 to July 2015. The Council had a duty to do this as appointee. The failure to notify the DWP of this change which affected Ms X’s entitlement is fault.
- In November 2014 Ms X moved to a new property and so the Council submitted a new housing benefit claim. The Council noted that Ms X had capital of £15,743. The officer made an informal note to review the capital the following year. This review took place in July 2015 when the Council noted Ms X’s savings had exceeded £16,000. The Council notified the DWP on 14 July of this change in circumstances.
- The Council says the DWP did not act on this information until November 2015. However, the bank statements show the last payment of ESA was made on 27 July indicating it did act but perhaps did not send written notification until November. The Council then notified the housing benefit department that entitlement to ESA had ended. The housing benefit section calculated an overpayment of £7,750.94 which was repaid from Ms X’s account reducing her savings to £8,460.82.
- The Council says it then notified the DWP and housing benefit department of this change and made new claims for both benefits. Ms X’s bank statements show a backdated ESA payment into her account in May 2016. Ms X continued to receive both ESA and housing benefit until the Council relinquished the appointeeship in May 2018.
- The Council says that at the time of this case, there were significant problems in its estates department. It was responsible for hundreds of cases and there was no access to online banking. It was receiving hundreds of bank statements every month and did not have the capacity to open them and update information. As a result, it was not aware that Ms X’s savings were increasing and so it failed to notify the DWP. There was no capacity to carry out annual reviews of cases which is why Ms X’s increasing savings went unnoticed for so long.
- While the Council ignored the issue of increasing savings, it was handling the other parts of Ms X’s finances correctly. All her bills were paid and she was given a weekly allowance as well as extra money when requested. I am pleased to note that the Council now has different systems in place including access to online banking. This means it works in a more proactive way. It is now able to identify cases where savings reach £6,000 and this triggers a review and consideration of what further action should be taken. In many cases, this will result in an application to the Court of Protection for a Deputyship which gives the Council greater powers to manage finances.
- The Council’s failure to notify the DWP of increased levels of savings meant Ms X received a higher level of benefit than she was entitled to. If the tariff income had been included in her benefit calculation, her weekly income would have reduced and her savings would not have increased at such a quick rate. Ms X had a higher rate of income than she was entitled to from February 2013 to July 2015.
- The Council, as appointee, also had a duty to spend the benefit in Ms X’s best interests. It is clear from the information provided, that Ms X was not a spender. Her mental health issues meant she found it difficult to spend money on herself. The Council had concerns about her being financially exploited by individuals in the community and so worked with her on this issue. However, I have not seen any evidence to show the Council prevented her from spending money.
- I consider the Council had a duty to keep Ms X informed about her financial situation. The Council controlled the bank account which dealt with all income and expenditure. The bank statements were sent to the Council, not Ms X, and so she had no way of knowing the true position of her finances unless the Council notified her.
- There is no evidence to show the Council ever told Ms X her savings were increasing or the impact this would have on her income. I cannot say with any certainty what action Ms X would have taken if she had been aware her savings were close to the upper savings threshold. I think it is unlikely she would have increased her spending significantly. However, the Council had a duty to ensure it spent the money in her best interests and it did not do this. It did not take any action to ensure Ms X and the social workers working closely with her, knew of the level of savings and the impact on her benefits. This is fault.
- While it is clear that Ms X’s savings would have increased because of her limited spending, I take the view, on balance, that her savings would not have exceeded £16,000 in December 2014 if the Council had carried out its duties as appointee correctly. This means her entitlement to ESA and housing benefit would not have ceased and the benefit overpayments would not have occurred.
- To remedy the injustice caused by the fault identified in this case the Council, within one month of my final decision, will take the following action:
Provide a written apology to Ms X;
Pay Ms X £7,750.94 which is an amount equivalent to the housing benefit overpayment she repaid;
Pay Ms X £5,920.30 which is an amount equivalent to the ESA overpayment claimed; and
Pay Ms X £250 to acknowledge the distress caused as a result of the fault in this case.
- I have completed my investigation with a finding of fault for the reasons explained in this statement. The Council has agreed to implement the actions I have recommended. These appropriately remedy any injustice caused by fault.
Investigator's decision on behalf of the Ombudsman