Summary: Mrs X complained the Council carried out an unfair and biased internal audit investigation into her administration of her children’s direct payments without giving her the opportunity to present evidence in her defence. I have discontinued this investigation. The Council carried out its internal investigation with the intention of passing it to the police for it carry out a criminal investigation. Therefore, it is unlikely we would find fault for not initially involving Mrs X in its investigation. The police declined to carry out a criminal investigation and Mrs X already has the opportunity to present her evidence in defence of the Council’s findings as part of an ongoing mediation process. It is unlikely that further investigation by the Ombudsman would lead to a different outcome

The complaint

1. Mrs X complains the Council carried out an unfair and biased internal fraud investigation into her administration of her children’s direct payments. Mrs X said the Council concluded she was guilty without giving her opportunity to present evidence in her defence.
2. Mrs X said the Council’s handling of the matter has damaged her reputation. She said she is innocent and wants the opportunity to clear her name.

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The Ombudsman’s role and powers

3. 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’. We provide a free service, but must use public money carefully. We may decide not to start or continue with an investigation if we believe:
• it is unlikely further investigation will lead to a different outcome, or
• it is unlikely we would find fault.

(Local Government Act 1974, section 24A(6), as amended)

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How I considered this complaint

4. I spoke to Mrs X about her complaint and considered the information she provided.
5. I considered the outcome of a previous complaint Mrs X made to the Ombudsman in 2018 and the agreed actions which arose from that complaint.
6. I considered information from the Council.
7. Mrs X and the Council had an opportunity to comment on my draft decision. I considered their comments before I made a final decision.

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What I found

Direct payments

8. Direct payments are cash payments made to individuals who ask for one to meet some or all of their eligible care and support needs. They 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.
9. The Care and Support Statutory guidance says the council must be satisfied that the direct payment is being used to meet the care and support needs set out in the plan, and should therefore have systems in place to proportionally monitor direct payment usage to ensure effective use of public money.

What happened

Background and the previous Ombudsman complaint

10. Mrs X has disabled children and receives assistance from the Council to care for them. In 2014 the Council agreed to provide Mrs X with direct payments on a prepaid credit card to enable her to arrange care and support for the children.
11. Between 2015 and 2016 Mrs X asserts that she spent nearly £15,000 on care for her children. However, instead of using the prepaid credit card to pay for the care she used her own personal funds.
12. In 2018 Mrs X complained to the Ombudsman. She said the Council did not properly explain how to administer the direct payments which is why she used her own funds instead of the prepaid credit card. Mrs X said she had not spent any of the money on the prepaid credit card. She asked the Council to reimburse the £15,000 of personal funds she had spent on care during that period. The Council had refused to reimburse Mrs X the money because it said she had not provided it with adequate evidence to prove how she had spent the funds. The Council told us it had referred the matter to its internal audit service to investigate potential fraud. The Council said it believed the receipts and invoices Mrs X provided it with were false.
13. We found the Council at fault in its administration and monitoring of Mrs X’s direct payments. To remedy the injustice this caused Mrs X the Council agreed to arrange and fund formal independent mediation. The purpose of the mediation was to:
• resolve the current financial dispute, by determining what, if any money is due to Mrs X, where she can demonstrate that this had been spent in good faith to address the agreed needs of the children, and
• to re-establish trust and rapport between the Council and 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.
14. We decided that the fraud investigation which the Council had concluded in April 2019 did not form part of the Ombudsman’s investigation.

The Council’s internal audit service investigation

15. The Council completed its internal investigation in April 2019. The report states its objective was to determine whether information submitted by Mrs X in support of her claim was accurate and legitimate. The report concluded the Council’s opinion was that the invoices provided by Mrs X to support her claim for reimbursement were fraudulent.
16. Records show the Council’s intention following its conclusions was to pass the matter to the police. Email records show the Council approached the police with the matter and asked it to investigate in January 2019. The Council asked it again in May 2019 and at the start of July 2019. At the end of July 2019, the police told the Council it would not undertake a criminal investigation because it did not have the resources and had more important jobs to attend to.
17. The Council decided to take no further action against her in relation to its internal findings.

Mrs X’s new complaint to us

18. Mrs X had submitted a subject access request and had obtained a copy of the Council’s report. Mrs X complained to the Council in June 2020 about its internal audit investigation. She complained the Council did not tell her about the investigation and did not involve her or let her present evidence in her defence. Mrs X said the Council had concluded she was guilty of fraud without considering her views or involving her at any stage. Mrs X said the Council’s investigation was bias and prejudiced from the outset.
19. The Council responded to Mrs X and referred to our previous decision where we decided not to include the internal investigation as part of our investigation. The Council said it had a duty of care to carry out an investigation to ensure public money is spent appropriately. The Council said it was not investigating the matter of fraud any further, and instead wanted to concentrate on arranging the independent mediation, as agreed at the conclusion of our previous investigation.
20. Mrs X remained unhappy and complained to the Ombudsman.

My findings

21. Mrs X has complained the Council did not involve her in its internal investigation and has refused to let her present her own evidence in response.
22. It was the Council’s hope that the police would carry out a criminal investigation into its internal investigation findings. The records show it was actively liaising with the police about it between January and July 2019. Based on this I have not investigated this aspect any further because it is unlikely we would find fault with the Council for not involving Mrs X in its internal investigation during that period.
23. Once the police decided it did not have capacity to carry out a criminal investigation into the Council’s findings the Council also decided, in July 2019, to take no further action. Mrs X still wants the Council to listen to her evidence in response to the findings of its internal investigation. However, the Council has already agreed to do this following our previous investigation, as explained in paragraph 13. The Council said the mediation is still yet to be arranged mainly because of delays and complications due to Covid-19. The agreed actions explicitly state that as part of the mediation, and to resolve the ongoing financial dispute, Mrs X can demonstrate she spent the money in good faith.
24. Therefore, I have discontinued this investigation because it is unlikely further investigation by me would lead to a different outcome. This is because Mrs X’s desired outcome is to present her evidence and clear her name. Mrs X can do that as part of the ongoing mediation process by demonstrating she spent the money in good faith as explained in paragraph 13.
25. It is open for Mrs X to complain to us again once the mediation process is concluded if she believes the Council failed to carry out the agreed actions from our previous investigation.

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Final decision

26. I have discontinued my investigation. This is because Mrs X’s desired outcome is already subject to an ongoing mediation process. It is unlikely further investigation by the Ombudsman would lead to a different outcome.

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Investigator's decision on behalf of the Ombudsman