Summary: Ms Y complained the Council acted unfairly in recovery of overpaid housing benefits to Mr X. Ms Y said the Council left Mr X confused, upset and with money problems. The Ombudsman will not investigate the overpayment because of the right to appeal to the Tribunal. The Ombudsman will not investigate matters that arose more than 12 months ago, as Mr X could have complained sooner. The Ombudsman finds fault with the Council for delays, debt collection practices and confusing communication with Mr X. The Council agreed to apologise to Mr X and apply a reduction to his overpayment debt with £1,000. The Council also agreed to review its appeal process and provide training about retention of appeal rights and overpayment recovery.

The complaint

1. Ms Y complained on behalf of Mr X. She said the Council acted unfairly in its recovery of overpaid housing benefit from Mr X. She says this left him confused, upset and with money problems.

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The Ombudsman’s role and powers

2. 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)
3. We cannot investigate a complaint if someone has appealed to a tribunal. (Local Government Act 1974, section 26(6)(a), as amended)
4. The Social Entitlement Chamber (also known as the Social Security Appeal Tribunal) is a tribunal that considers housing benefit appeals. (The Social Entitlement Chamber of the First Tier Tribunal)
5. We cannot investigate late complaints unless we decide there are good reasons. Late complaints are when someone takes more than 12 months to complain to us about something a council has done. (Local Government Act 1974, sections 26B and 34D, as amended)
6. 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)

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How I considered this complaint

7. I considered the complaint Ms Y made and discussed it with her. I asked the Council and its debt collection agents for information and considered what they provided.
8. I cannot consider whether the overpayments are correct as Mr X has used his right of appeal to a tribunal.
9. I have exercised discretion to consider events from February 2018, as this is when Mr X questioned the overpayment.
10. Ms Y and the Council accepted my draft decision. As such I have reached a final decision.

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What I found

11. If a council pays too much housing benefit to someone it will usually ask them to repay it. The law says an overpayment is recoverable unless it was caused by an official error and it was not reasonable to expect the person to realise they were receiving too much benefit.
12. If someone disagrees with a decision that they must repay an overpayment they can appeal to the tribunal. The law says people should appeal within one month of the date of the decision they think is wrong. The tribunal can accept a late appeal up to 13 months from the date of the decision.

Housing Benefit Overpayments Guide, Part 4 Recovery of Overpayments

13. This guidance says it is good practice for a Council to wait until a person’s appeal rights’ period has expired before starting debt recovery action.
14. If debt recovery has started, it is good practice for a Council to suspend debt recovery action until an appeal has been decided.
15. This gives the person time to query the overpayment, including exercising their right to ask for a written statement or explanation. It also allows a person time to seek advice about appealing or request a review from the Council about the overpayment. A person has a right to query a debt before recovery begins.

Housing Benefit Overpayment Recovery Good Practice Guidance

16. The Council can still issue invoices and reminders about the debt before the appeal rights’ period has expired but should not start recovery action. It is good practice to send a letter before any official debt collection to give a person the opportunity to settle a debt.
17. A Council can use more than one debt collection agent to chase a debt and use the legislative powers at their disposal to chase a debt. This includes using deductions from continuing housing benefits or getting direct payments from a claimant’s employer through wage deductions.
18. Council Policy on Overpayments
19. The Council will write to a person if it has made an overpayment to them.
20. If a person disagrees with the overpayment, they can ask the Council to provide an explanation (called a statement of reasons) or review the decision. The Council says a person should appeal the decision to the tribunal within one month of the letter detailing the overpayment.
21. If a person asks for an explanation, the Council will extend a person’s one-month appeal timescale from the date of the explanation letter. A person retains the right to ask the Council to review the decision.
22. If a person asks the Council to review the decision, the Council will again extend the one-month appeal timescale from the date of the decision notice.
23. If a person appeals the decision but the Council upholds its decision at review, it should send a person’s appeal to the tribunal service.

Council Policy on Debt Recovery

24. The Council’s policy says it will deduct an amount from a person’s weekly housing benefit entitlement to reduce the overpayment while a person is still receives housing benefits.
25. If a person stops receiving housing benefits, the Council will send an invoice to the person for payment in full. A person can contact the Council to discuss repayments through instalments.
26. If a person does not respond to the invoice requesting payment the Council will take further recovery action. These actions can include:
• Deductions from other benefits.
• Passing the debt to collections agents to recover the debt.
• Register the debt as an order of the court enabling an attachment of earnings order to deduct the debt from a person’s salary.

Ombudsman Guidance on Remedies

27. We expect bodies in jurisdiction to treat people fairly and with respect, and not to expose the public to unnecessary distress, harm or risk as a result of their actions or inactions. Such injustice cannot generally be remedied by a payment, so we usually seek a symbolic amount to acknowledge the impact of fault on the complainant. The amount depends on the circumstances of the case.
28. When we assess distress, we consider the complainant’s individual circumstances (such as their state of health and age). In reaching a view on remedy we will consider all the circumstances including:
• The severity of the distress.
• The length of time involved.
• The number of people affected (for example, members of the complainant’s family as well as the complainant).
• Whether the person affected is vulnerable and affected by distress more severely than most people.
• Any relevant professional opinion about the effects on any individual.
29. A remedy payment for distress is often a moderate sum of between £100 and £300. In cases where the distress was severe or prolonged, up to £1,000 may be justified. Exceptionally, we may recommend more than this.

Background

30. English is not Mr X’s first language and he does not speak or read it well. In 2015 the Council decided it had overpaid Mr X £10,381.46 in housing benefit. The Council started to recover the money from Mr X through deductions from his housing benefit.
31. Mr X has shown, through a receipt, he handed documents to the Council in March 2016. The Council does not have a copy of what Mr X provided.
32. In November 2017, the Council ended Mr X’s claim for housing benefit backdated to June 2017. The Council said between June and November 2017 it had overpaid Mr X £328.27. In February 2018 it sent Mr X invoices for this and the £8,326.86 it said was still outstanding from the earlier overpayment.

What Happened

33. On 15 February 2018, Mr X asked for a review of the decision the Council had overpaid him housing benefit. He provided employment details including P60s and P45s.
34. Then Council replied on 3 April 2018 that Mr X was out of time for an appeal. The Council wanted Mr X to pay £200 a month for repayment of the historic overpayment. Mr X asked for an explanation on 16 April 2018.
35. The Council replied on 10 May 2018, saying it made the decision in 2015 about how much it would reclaim when it started reclaiming the £10,381.46 overpayment. Mr X asked for a late appeal and said the Council had not told him of its 2015 decision. The Council provided Mr X with a form for a late appeal which said the decision date was 10 May 2018.
36. Mr X completed and returned the form on 13 May 2018 requesting an appeal to the tribunal. Mr X asked for a written statement of reasons for the overpayment.
37. The Council provided an explanation to Mr X on 15 October 2018. This explanation also included a spreadsheet of the overpayments which said the balance outstanding owed totalled £8,655.53. This combined the two previous separate Housing Benefit overpayments.
38. Mr X asked for a review of the Council’s decision.
39. The Council asked Mr X for more information in November 2018. Mr X replied to say that he had provided the information to the Council and had receipts and asked for the review to continue. The Council received this on 10 December 2018.
40. The Council did not respond to Mr X’s request for a review of the decision at this time.
41. The Council referred Mr X’s debt to two separate collection companies on 12 March 2019. The Council said it referred the debt to a collection company as Mr X had not paid towards the debt. Both companies wrote to Mr X. Mr X contacted both companies.
42. The Council recognised it had referred the debt to the second collection company in error and recalled this on 18 March 2019. The Council did not tell Mr X it had taken the debt back from one company. But, the collection company responded to Mr X on 1 April 2019 to confirm it was no longer dealing with the debt as the Council recalled it.
43. The Council left the other collection company to continue collecting the debt.
44. Between 15 March and 28 May 2019, the remaining debt collection agency sent 7 letters and made 4 telephone calls to Mr X to try to recover the debt. Mr X and Ms Y both contacted the company to protest that Mr X disputed the debt and was waiting for an appeal. They also said the Council was harassing Mr X as it had 2 debt collecting companies chasing him.
45. On 29 March 2019, the Council asked Mr X’s employer to make deductions from his income. It wrote to Mr X to tell him this on 14 April. Mr X’s employer sent the Council £546.70 on 26 June.
46. The Council replied to Mr X’s review request for the overpayment on 20 June 2019. It said the review team could not deal with it, and it had sent the request to the appeals team. The appeals team said Mr X was too late to appeal on 21 June 2019. The letter went on to explain why the Council said its original decision was right.
47. The Council withdrew the debt from the debt collecting company on 1 July 2019. Mr X’s employer sent the Council £300 on 18 July 2019 from Mr X’s wages. After that it sent £250 a month from Mr X’s wages to the Council.
48. Ms Y complained on behalf of Mr X. I have not seen a copy of the complaint or Stage 1 reply, but I understand the Council did not uphold the complaint.
49. On 27 July 2019 Ms Y asked the Council to consider her complaint at the next stage of its complaint procedure. She wanted the Council to pass the appeal to the tribunal. She complained about the Council’s delays and that it had used two debt collection companies and not responded to her complaint about this.
50. The Council promised a Stage 2 response by 23 August 2019. The Council also promised a separate response from its debt recovery team.
51. The Council replied in a letter dated 12 August 2019. The Council accepted it had delayed in dealing with Mr X’s request for a review. The Council also accepted Mr X had provided information in March 2016 which it did not have a copy of. The Council accepted the information Mr X provided was likely to be a dispute. The Council said it would reissue the overpayment decisions of 2015 which meaning Mr X could appeal.
52. Ms Y did not receive the complaint response and continued to ask the Council for it. The Council was not sure it had sent the response and so sent a copy to Ms Y in January 2020.
53. On 2 December 2019, the debt recovery team replied to Ms Y’s complaint. It said it can use a debt collection company, but it had sent the debt to two companies in error. It said it had started deductions from Mr X’s earnings because he had not paid towards the debt.
54. On 29 June 2020, the Council completed a second review of Mr X’s overpayment. The Council did not change its decision, it said it would send the papers to the tribunal.
55. In July 2020 Ms Y contacted us to say the tribunal had told her the appeal was out of time. We advised her to send the tribunal the Council’s letters of 12 August 2019 and 29 June 2020.
56. In response to the Ombudsman’s enquiries the Council accepts it had delayed dealing with the review. It said this was because the officer who replied to the complaint left her position. It offered Mr X £100 for the delay.

Analysis

57. The Ombudsman cannot investigate a complaint about any matter which Mr X appealed, or could have appealed, to a tribunal. The Ombudsman can, however, investigate the actions the Council took leading up to the appeal.

Appeal Process

58. Mr X asked for a review of the Council’s 2015 decision about overpayment in February 2018. The Council provided the correct information to Mr X in April 2018 that due to time limits he no longer had appeal rights. I do not find fault with the Council’s actions.
59. Mr X told the Council he was not aware of the Council’s 2015 decision. The Council used its discretion to reinstate Mr X’s appeal rights by sending a new decision dated 10 May 2018 and a late appeal form. I again do not find fault with the Council.
60. This action from the Council entitled Mr X to his appeal rights through the Council’s policy on overpayments. Mr X asked for an explanation or full written statement of the overpayment on 13 May 2018. Mr X also completed the appeal form asking for an appeal to the tribunal.
61. Mr X asked for this explanation within one month the new decision letter dated 10 May 2018. Mr X’s appeal rights existed until one month from the Council’s explanation or full written statement.
62. The Council sent Mr X a full written statement on 15 October 2018. Mr X asked for a review of the Council’s decision within one month of the Council’s full written statement. This again extended Mr X’s appeal rights until one month from the Council’s review decision.
63. The Council issued Mr X’s review decision on 21 June 2019. The Council also advised Mr X he had no appeal rights to the tribunal. The Council had reinstate Mr X’s appeal rights with the decision letter of 10 May 2018. These appeals rights remained intact while the Council handled Mr X’s request for a full written statement and review of the decision. The Council telling Mr X he no longer had appeal rights to the tribunal was incorrect. This is fault.
64. However, the Council recognised this fault in response to Ms Y’s complaint and advised Ms Y and Mr X on 12 August 2019 that it had reinstated his appeal rights.
65. The Council had already completed a review, and this was not in Mr X’s favour. Mr X did not have to ask for the appeal be forwarded to the tribunal; the Council should have done this without further consideration. The Ombudsman considers the Council could have done this within four weeks. The Council did not pass Mr X's appeal to the tribunal until 20 June 2020. This is fault.
66. Misinformation from the Council and the failure to pass Mr X’s appeal to tribunal in August 2019 caused Mr X distress and uncertainty, before considering the Council’s delay and debt recovery actions.
67. The Council has accepted delay in sending Mr X’s appeal to the tribunal service and has highlighted this matter as a training issue. The Council should also provide training on a person’s retention of appeal rights while the Council issues a written explanation and completes a review in line with its policy.

Delay

68. Mr X first contacted the Council in February 2018. Mr X and the Council did not initiate the official appeals process at this point. The Council engaged with Mr X and reinstated his appeal rights by 10 May 2018. The Council acted in a suitable and timely manner from February 2018 to May 2018 to reach this point. I do not find fault with the Council.
69. Mr X asked for an explanation, or full written response, on 13 May 2018. This is the first step in the Council’s appeal process. The Council took 22 weeks to provide this response to Mr X. The Ombudsman considers the Council could have done this within four weeks. This delay of 18 weeks is fault
70. When Mr X asked for a review of the Council’s decision in October 2018, the Council acted suitably to request further information from Mr X. The evidence shows the Council received Mr X’s response on 10 December 2018. This is when the Council became responsible for completing the second step of its appeal process. The Council took until 21 June 2019 to provide its review decision. The Ombudsman considers the Council could have done this within eight weeks. This 19 weeks delay is fault.
71. As noted above, the Council was at fault for advising Mr X on 21 June 2019 he could not appeal the decision. This fault started the delay by the Council in referring Mr X’s appeal to the tribunal until 29 June 2020.
72. While the law provides that the Council could seek further comments from Mr X following the reconsideration, the Council did not need to ask Mr X if he wished to make a further appeal. This may have added to the delay. Allowing four weeks for this still means there was a delay of about 50 weeks in passing the appeal to tribunal. This delay is fault. 
73. Cumulatively, the delays caused by the Council from request to referral amounted to 87 weeks. This delay is significant and caused Mr X distress, frustration and uncertainty about his financial situation.
74. While the Council responded to Ms Y’s stage 2 complaint within its complaint timescales of 20 working days, it separated part of Ms Y stage 2 complaint for its debt collection team to address.
75. Asking a different department to respond to a stage 2 complaint does not exempt the Council from responding to that part of the complaint within its complaint policy timescales. The debt collection team failed to respond to Ms Y’s stage 2 complaint until 9 December 2019. This is a 15-week delay, and this is fault.
76. This delay caused frustration for Ms Y and the Council should apologise. The Council should also remind departments about the Council’s complaint policy timescales and the importance of adhering to these.

Debt Recovery Practices

77. The Council was collecting Mr X’s overpayment through deductions in his housing benefit up to November 2017. The Council acted in line with the Guidance to recover the overpayment through this method.
78. When Mr X stopped receiving housing benefits the Council needed to recover the overpayment through a different method. The Council acted in line with the Guidance and its policy by sending an invoice to Mr X in February 2018 asking for payment. While Mr X responded to the Council, he did not pay towards the overpayment.
79. The Council passed the debt to two debt collection agencies on 12 March 2019. The Council recalled the debt from one collection agency six days later. While the Council has said passing the debt to this second collection agency was an error, the Council was entitled to use more than one collection agency. This is not in itself fault.
80. The Council also contacted Mr X’s employer to seek recovery through Mr X’s salary. The Council was entitled to use this method of recovery even though it had instructed a debt collection agency. It is good practice for a Council to use the debt collection tools at its disposal in a flexible manner to find the most successful debt recovery method for an individual. The Council withdrew the debt from the second collection agency immediately following a successful first payment from Mr X’s employer. I also would not find the Council at fault for the way its collections team approached recovery of the debt.
81. However, while there is no legislative requirement to halt overpayment recovery if a person lodges an appeal, it is good practice to do so. The government guidance recommends that recovery action should not begin until appeal rights have expired.
82. The Council reinstated Mr X’s appeal rights on 10 May 2018. Because of the Council’s delays detailed above, Mr X’s appeal rights did not expire until July 2020. This meant the Council’s debt collection team began recovery action before Mr X’s appeal rights expired. This is fault from the Council.
83. This fault added extra distress for Mr X from March 2019 to July 2019 through dealing with debt collection agencies. It is for the tribunal to decide the validity of the overpayment. However, this does not negate the financial impact through early recovery of the overpayment since June 2019, before the tribunal had heard Mr X’s appeal.
84. The Council should review its appeals process to ensure its debt collection team is kept appraised of when a person has existing appeal rights and to consider Government Guidance on overpayment recovery in these circumstances.

Fault and Injustice

85. The Council was at fault for providing misinformation to Mr X about his appeal rights in June 2019 and failing to pass Mr X’s appeal to tribunal in August 2019. The Council was at fault for a cumulative avoidable delay of 87 weeks from 13 May 2018 to 29 June 2020 in the handling of Mr X’s appeal. The Council was also at fault for a further delay of 15-weeks in the debt collection team responded late to part of Ms Y’s Stage 2 complaint. Additionally, the Council was at fault for starting debt collection activity more than a year prior to Mr X’s appeal rights ending.
86. The fault by the Council caused both Mr X and Ms Y distress.
87. Ms Y’s distress would have been of a low level due to the delay only being 15 weeks for part of her Stage 2 complaint. For this, I consider an apology is sufficient.
88. However, Mr X’s distress would be quite severe given the financial implications surrounding Mr X’s complaint. The Council’s fault also covered various areas over a two-year period. During which time, the Council caused avoidable delays of over 87 weeks. It is also of note that Mr X’s first language is not English which would create the scope for greater confusion and added distress.
89. In the circumstances of Mr X’s complaint, I would consider the distress Mr X experienced as a result of the Council’s fault was both severe and prolonged. For this reason, I recommend the Council should apologise to Mr X and provide a payment for £1,000 as a reduction to the overpayment debt to remedy the injustice caused.

Agreed action

90. Within one month of the Ombudsman’s final decision the Council will:
• Provide Mr X with an apology and apply a reduction to Mr X’s overpayment debt with £1,000 to reflect the misinformation and failure in process from the Council. This failure in process caused Mr X unnecessary distress, frustration and financial uncertainty through an 87-week delay in taking Mr X’s request for an appeal through to referral to tribunal and premature debt collection activity.
• Provide Ms Y with an apology for the delay in the debt collection department responding to part of her Stage 2 complaint.
91. Within three months of the Ombudsman’s final decision the Council will:
• Review its appeals process and provide training about the retention of appeal rights while the Council follows its pre-tribunal appeal process and the subsequent impact on overpayment recovery, considering Government guidance.
• Ensure all relevant departments are reminded about the Council’s complaint policy timescales and the importance of adhering to these.

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Final decision

92. There was fault by the Council as the Council has agreed to my recommendations, I have completed my investigation.

Investigator’s decision on behalf of the Ombudsman

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Investigator's decision on behalf of the Ombudsman