Summary: Mrs X complains the Council failed to properly advise or support her in the administration of direct payments for the care of her children. There was fault in the Council’s administration and monitoring of Mrs X’s direct payment arrangements. This fault has caused Mrs X an injustice.

The complaint

1. The complainant, whom I shall refer to as Mrs X complains the Council failed to properly advise or support her in the administration of direct payments for the care of her children. As a consequence, Mrs X paid for her children’s care and support privately. She expected to be reimbursed from the direct payments, but the Council has refused to make payments based on the invoices Mrs X has provided.

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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. 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)
4. Under the information sharing agreement between the Local Government and Social Care Ombudsman and the Office for Standards in Education, Children’s Services and Skills (Ofsted), we will share this decision with Ofsted.

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How I considered this complaint

5. As part of the investigation, I have:
• considered the complaint and the documents provided by Mrs X;
• made enquiries of the Council and considered the comments and documents the Council provided;
• discussed the issues with Mrs X;
• sent a statement setting out my draft decision to Mrs X and the Council and invited their comments. I have considered Mrs X and the Council’s responses.

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What I found

Direct payments

6. Once a council has decided on a person’s eligible needs, it can either provide or commission the services for the person, or if they prefer, the council can give them a cash payment (a direct payment) so they can organise their own care. 
7. Direct payments provide independence, choice and control by enabling people to commission their own care and support to meet their eligible needs. The council has a key role in ensuring that people have relevant and timely information about direct payments so they can decide whether to request them. If they do so, the council should support them to use and manage the payment properly.
8. The Council’s website states service users can choose to receive their direct payments onto a prepaid card or to a separate bank account that they have set up. The prepaid card is like a traditional bank account, but without a cheque book. If the service user chooses to have a prepaid card the Council will send it to their home address with instructions on how to activate it.

What happened here

9. Mrs X has disabled children. When she moved to Lancashire, Mrs X asked the Council for assistance in caring for and supporting her children. The Council initially commissioned a service to support Mrs X’s children. When this service broke down, Mrs X asked for direct payments to be able to arrange the care and support needed herself.
10. There is no record in the information provided by the Council of any discussion at this stage about the direct payments, or how they would work. The Council approved the use of direct payments in December 2014 and in January 2015 sent Mrs X a prepaid card. It also asked the direct payment team to arrange an initial visit with Mrs X. This visit did not take place until July 2015.
11. Mrs X had used a different system to administer the direct payments at her previous local authority and was unfamiliar with the prepaid card system. She states that shortly before the card arrived their property was burgled. As Mrs X was not expecting to receive a card, and the name on the card was mis-spelt, she assumed someone had attempted to steal her identity following the break in. Mrs X did not use the prepaid card, but paid carers from her personal funds.
12. During a Child in Need review meeting in June 2015 Mrs X advised the children’s social worker that she did not know what to do with the prepaid card. No one from the direct payments team had spoken to or visited her and she was paying the carers from her own funds. The social worker advised Mrs X she should not use her own funds and asked the direct payments team to visit Mrs X.
13. An officer visited Mrs X in July 2015 to discuss the prepaid card. The notes of this visit state Mrs X said she would be using self-employed carers, and the officer referred her to the Council’s guidance. The officer explained the carers would need to submit invoices and Mrs X should ensure they had employment insurance and paid their tax.
14. Mrs X also signed a Direct Payments Agreement. This sets out how the direct payments can be used and the records Mrs X would need to keep. These include:
• Signed time sheets and copy pay slips;
• Receipts and invoices;
• Certificates of Employer’s liability insurance; and
• Records of personal assistant expenses.
15. The officer visited Mrs X in October 2015 to review the direct payments. Mrs X had not used the direct payment account. She said she could not find the card and was continuing to pay the carers from her own funds. Mrs X advised the officer she and her husband had paid £7505 to the carers between 9 February and 2 October 2015. Mrs X did not have invoices for these payments but would ask the carers to provide invoices for future payments. Mrs X asked the Council to reimburse her for these payments.
16. The Council arranged for a replacement prepaid card and wrote to Mrs X asking for retrospective invoices for all payments to carers. It advised that without these invoices the Council would be unable to authorise repayment from the direct payment account. The Council also asked Mrs X to ensure carers submitted invoices for all future payments.
17. In November 2015 Mrs X complained about the way the Council had managed the direct payments. The Council should have visited them to discuss the direct payment arrangements when they were set up at the start of the year but did not. They began paying carers directly in February 2015, but an officer did not visit them until July 2015. Mrs X was concerned the Council wanted to retrospectively apply guidelines they had not been aware of.
18. The Council apologised for the delay in an officer visiting to assist in setting up the direct payments administration. It noted that the children’s social worker and the visiting officer had advised Mrs X in June/ July 2015 not to continue paying carers from her own funds. The Council confirmed it would need a clear audit trail showing the amounts Mrs X had paid carers before it could agree to transfer the £7505.
19. A financial officer visited Mrs X in January 2016 to discuss the direct payments. Mrs X had continued to pay carers from her own funds rather than use the prepaid card. Mrs X gave the officer retrospective invoices and states the officer said they should be sufficient. The only feedback she received was to put the weekly hours worked on the larger of two invoices.
20. The Council disputes this and state the officer advised Mrs X the paperwork was insufficient and asked her to provide appropriate documentary evidence. The Council did not write to Mrs X confirming its instructions following the review meeting.
21. In June 2016 Mrs X asked the Council to cancel the direct payments, and commission a specialist service for her children. Mrs X had not used the direct payment account and states that by this stage she had paid the carers £14,270 from her own funds.
22. Mrs X had instructed solicitors to write to the Council on her behalf regarding the direct payments. The solicitor’s letter is dated 1 February 2016, but the Council states it did not receive it until 7 April 2017 when Mrs X’s solicitor sent a further copy.
23. In its response, the Council states it had not received any invoices or receipts from Mrs X, and could not consider making any payments without appropriate formal invoices. In a further response it asserted the invoices provided were inadequate and the officer advised Mrs X of this at the meeting in January 2016. It also noted the invoices did not correspond with the payments shown on Mrs X’s bank statements. The Council confirmed it would meet with Mrs X to inspect her bank statements and original invoices.
24. Officers were due to meet with Mrs X on 10 November 2017 and agreed to review her bank statements at this meeting. The Council’s case notes state:

“…requested the bank statements re the issues with DP. Initially the parents were going to give them to [the officer] to enable her to look at the invoices and ensure an audit trail, parents questioned the need for this and then decided not to give the bank statements over to [the officer], but to seek advice from her solicitor.”

25. Mrs X disputes this. She states most of the meeting was spent discussing the children’s care package. In the final few minutes of the meeting the officer said it was too late to consider the statements and asked to take them away. As they were the only copies Mrs X did not feel comfortable with them leaving her home, in case they were lost. She asked for a further meeting at her home to review them. Mrs X states the officers agreed to check their diaries and confirm a suitable date but did not contact her again. There is no evidence that either the Council or Mrs X attempted to arrange a further meeting.
26. Mrs X has asked the Ombudsman to investigate her concerns as she remains unhappy with the Council’s actions. She maintains the Council did not advise her in advance how to administer the direct payments using a prepaid card or help to set this up. Mrs X believes the Council is unwilling to investigate or resolve her complaint fairly, impartially or robustly. She would like the Council to reimburse the £14,270 she has paid to the carers, £135 employer’s insurance and £4080 she has paid in legal fees.
27. The Council’s response to my enquiries states Mrs X advised the Council she had received direct payments from her previous local authority and knew how they worked. The Council has confirmed it has no issue with reimbursing Mrs X, but requires invoices to support the amounts she is claiming.
28. In response to my initial draft decision the Council acknowledged it was at fault in respect of the delay in carrying out the initial direct payments meeting. However, it asserts that following the meeting in July 2015, Mrs X was well informed of the direct payment administration process. The Council also noted Mrs X had successfully run direct payments for many years before moving to Lancashire. She would therefore have been aware of the requirement to retain records of expenditure. The Council states that Mrs X made it very clear that she did not require further guidance or advice as she was well aware of the process of direct payments. Mrs X disputes this and states she did not refuse help, and clearly needed it.
29. The Council also raised concerns about the receipts and invoices Mrs X had provided. It referred the matter to its internal Audit Service to investigate potential fraud. This fraud investigation does not form part of the Ombudsman’s investigation.

Analysis

30. Based on the documentation available I consider there was fault in the way the Council administered Mrs X’s direct payment arrangements. To consider this further, I have divided the period in question into two phases. Phase one is from setting up the direct payments in December 2014/ January 2015 to July 2015, when Mrs X signed a Direct Payment Agreement. Phase two is the period after Mrs X signed the Direct Payment Agreement to June 2016 when the direct payments ended.

Phase one

31. There is no evidence the Council explained Mrs X’s duties and obligations under the direct payment arrangement to her at the outset. Nor is there any evidence the Council explained how the Council’s direct payment scheme or prepaid card worked. The Council began making direct payments in February 2015 without ensuring there was a formal Direct Payment Agreement in place, and an officer did not meet with Mrs X to discuss the direct payments until July 2015. These failings amount to fault.
32. During this period the Council also failed to properly monitor the direct payment arrangements and ensure they were being used to meet the assessed needs of the children. The Council’s Direct Payment policy states

“The Direct Payments Prepaid Card enables the council to monitor spending remotely and in 'real time', enabling intervention where necessary to take place much sooner. The remote monitoring arrangements are less intrusive and easier for the recipient.”

33. By July 2015 the Council had made direct payments of £8,801.43. Mrs X had not made any withdrawals. Had the Council been effectively monitoring the direct payments it should have identified there was an issue with the direct payments much sooner. Given this significant balance and complete lack of transactions, the Council should have intervened not only to consider whether to recover the money, but more importantly to ensure the needs of the children were being met. This failure to oversee the direct payment arrangements amounts to fault.

Phase two

34. Mrs X continued to pay carers from her own account rather than the prepaid card from July 2015 to June 2016, but this was not due to fault by the Council. The Council explained how to use the prepaid card and Mrs X’s responsibilities and duties regarding the direct payments in July 2015. Mrs X also signed a Direct Payment Agreement confirming she would abide by the terms and conditions of the scheme. But she chose not to use the direct payments and continued to pay the carers from her own funds.
35. Mrs X is unhappy with the significance I have placed on this meeting in July 2015. She disputes the assumption that following this meeting she understood the direct payments system and knew how to proceed. She states she would have signed any document needed to ensure the Council continued to make the direct payments.
36. I recognise this was a difficult period for Mrs X, but there is no evidence Mrs X asked for further assistance with the card or expressed concerns about using the system. Mrs X could have used this opportunity to ask the officer for help or could have told the officer she could not manage the direct payments system. There is no evidence Mrs X gave any indication she would not, or could not, use the prepaid card going forward.
37. However, I consider there was further fault in the Council’s oversight of the direct payment arrangements. The Council was on notice in July 2015 that the arrangement was not working as intended. It should have exercised ongoing due diligence to make sure that public money was being spent properly and that the children were getting the care they were entitled to. I consider the Council missed opportunities to intervene and address the issues.
38. The Council asserts it was proactively monitoring the arrangements as an officer met with Mrs X in October 2015 and January 2016 to discuss the direct payments. But the efficacy of these meetings is questionable as Mrs X continued to pay carers from her own account and by October 2015 the balance on the prepaid card had grown to £13,121.43 and had reached £15,281.43 by January 2016.
39. The Council’s Direct Payment Agreement states:

“We will contact You or your Nominated Representative about any balance on your Prepaid Card or in your direct payments bank account which exceeds ten weeks direct payments monies to find out if the money is needed. Any money which is not needed will be reclaimed by Us.”

40. Ten weeks direct payment monies for Mrs X’s children amounts to £2,700. Despite clear indications of a problem, the Council made no attempt to reclaim any money or discontinue the direct payment arrangements and commission care for the children. The direct payments ended in June 2016 at Mrs X’s request, by which stage there was over £20,000 on the prepaid card. This is not indicative of proactive or effective monitoring of the direct payment arrangements.
41. Having identified fault I must consider whether this has caused Mrs X an injustice and if so, what an appropriate remedy would be. In doing so I must consider what would have happened but for the fault.
42. It is clear the Council’s communication and administrative failures during Phase one will have caused Mrs X some injustice. Mrs X has experienced uncertainty, distress and frustration and been put to unnecessary time and trouble. But I am not persuaded the remedy for this injustice would be a full refund of the money she has paid to carers.
43. Mrs X’s actions after July 2015 suggest that even if the Council had properly advised her from the outset, she would have paid the carers from her own account, and not used the prepaid card. Mrs X chose to use her own account, rather than administer the payments properly, even after the Council had explained the system and rules. I do not therefore consider there is a direct, causal link between the fault identified and the sum of money Mrs X paid to the carers.
44. The faults identified in Phase two will also have caused Mrs X an injustice. It is arguable that had the Council intervened and brought the direct payment arrangement to an end sooner, Mrs X would have made fewer payments to the carers.
45. The Direct Payment Agreement signed by Mrs X allowed the Council to terminate the agreement with immediate effect if:
• Mrs X was not complying with any part of the agreement;
• Mrs X was not spending any part of the payment as agreed in the children’s Support Plans;
• The children’s needs and agreed outcomes were not being met as agreed in their Support Plans;
• Mrs X was no longer capable of managing the direct payments even with support; or
• The Council was not satisfied that Mrs X’s arrangements were adequate for securing the services.
46. As Mrs X was not complying with the Direct Payment Agreement, and it was perhaps questionable whether she was capable of managing these direct payments it was open to the Council to terminate the agreement. The Council was aware in October 2015 Mrs X was still not using the prepaid card and could have ended the agreement at that stage. Certainly, by January 2016 the Council should have had sufficient concerns about the direct payment arrangements to have considered terminating the agreement.
47. Again, I do not consider the appropriate remedy for this injustice would be a full refund of the money she has paid to carers. This money may be owed to Mrs X but the dispute over the amount due is not entirely because of the Council’s maladministration, so we would not automatically recommend a full refund. The Council is required to satisfy itself that itself that the money was correctly applied to meet the needs of the children, that Mrs X properly discharged her employment responsibilities, and that public money was managed correctly. That is made more difficult by Mrs X’s own actions and incomplete records/evidence of her expenditure.
48. Notwithstanding this, I consider the Council has a responsibility to engage constructively with Mrs X to resolve that dispute and determine what money has legitimately and demonstrably been spent on the care of the children in line with their agreed needs.
49. I am also mindful that Mrs X will need to have an ongoing constructive working relationship with the Council for years to come to ensure that the needs of the children are met. This will be difficult unless the breakdown of trust between Mrs X and the Council is resolved.
50. I consider formal mediation between the Council and Mrs X would be an appropriate means of resolving the financial dispute and re-establishing an effective working relationship between Mrs X and the Council.
51. Mrs X would like to Council to reimburse her legal fees, but we would only recommend this in exceptional circumstances. In this instance Mrs X chose to instruct solicitors to assist her with this and other issues relating to her children’s care needs. Mrs X made a complaint to the Council in November 2015 and I am not persuaded she needed to be legally represented to make a further complaint in 2016. I also note that having made this complaint Mrs X’s solicitors did not chase the Council for a response for over 12 months, and then only did so as part of correspondence on another matter. I do not therefore consider it appropriate to recommend reimbursement of these fees.

Agreed action

52. The Council has agreed to apologise to Mrs X for the failure to properly advise her at the outset of her duties and responsibilities and how the direct payments would work; and the failure to effectively monitor the direct payments arrangements.
53. The Council has also agreed to pay Mrs X £200 in recognition of the uncertainty, distress and frustration she has experienced and the time and trouble she has been put to by the faults identified above.
54. The Council should carry out these actions within one month of the final decision on this complaint.
55. In addition, the Council has agreed to arrange and fund formal independent mediation between the Council and Mrs X. The purpose of the mediation should be twofold:
1. to resolve the current financial dispute, by determining what, if any money is due to the Mrs X, where she can demonstrate that this had been spent in good faith to address the agreed needs of the children, and
2. to re-establish trust and rapport between the Council and the Mrs X to ensure that they have a constructive relationship enabling them to work together in the future in the best interests of the children.
56. Subject to Mrs X’s availability and cooperation, the Council should arrange this mediation to commence within one month of the final decision.
57. Further, within three months of the final decision on this complaint the Council has agreed to:
• review its policy and practice on how it communicates with and supports service users when direct payments arrangements are first put in place;
• review its monitoring arrangements for direct payment agreements to ensure that potential breaches of the agreement or accumulation of monies are identified and addressed in a timely manner;
• provide guidance and training to relevant officers to ensure they understand the steps they should take when a service user breaches the direct payment agreement or there is an accumulation of monies.
58. The Council should report back to the Ombudsman with evidence of the action it has taken.

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Final decision

59. There was fault in the Council’s administration and monitoring of Mrs X’s direct payment arrangements. This fault has caused Mrs X an injustice.

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Investigator's decision on behalf of the Ombudsman