Guide to Financial Redress for Maladministration

Introduction

About this guide

1 The guide sets out the approach to be taken when considering remedies for justified complaints. It describes the special payments scheme operated by the Department for Work and Pensions (DWP) and provides advice on the consideration of financial redress in respect of maladministration. The guide provides

  • examples of what constitutes maladministration and sets a context in which to consider official error
  • the circumstances when financial redress should be considered and
  • the redress that will be appropriate for each type of case.

Defective legislation – extra-statutory payments not covered by this special payments scheme

2 The guide does not cover the extra-statutory payments made where, for example because of official oversight, current legislation does not provide for payment as intended by Ministers. It is for the relevant policy and operational teams to determine whether extra-statutory payments should be made pending legislative change and to obtain the necessary authority from HM Treasury to make such payments (see Annex A).

Discretionary nature of the special payments scheme

8 Ex gratia special payments are described in “Government Accounting” as `payments which go beyond administrative rules or for which there is no statutory cover or legal liability’. As Parliament does not include provision for special payments when voting money or passing specific legislation, there is no legal liability to make such payments. Due to their exceptional nature, the payments are made on a discretionary extra-statutory or ex gratia basis.

Taking complaints further

9 As special payments are not covered by statute, the customer has no right of appeal against a refusal to make such a payment. Customers may, however, ask the Department to look again at a rejected request, for example, in the light of new evidence or may make a complaint about the level of an award of compensation.

 

What is Maladministration?

11 `Maladministration’ is the term used to describe the action or inaction that leads to a failure in the processes of government. The term is not defined within the Parliamentary Commissioner Act 1967 but the following examples were quoted by Richard Crossman, Leader of the House of Commons, when the Parliamentary Commissioner Bill was taken through Parliament in 1966:

`bias, neglect, inattention, delay, incompetence, ineptitude, perversity, turpitude and arbitrariness’.

12 A fuller interpretation of maladministration was given in the Parliamentary Ombudsman’s Annual Report 1993. Treasury Ministers endorsed the interpretation in November 1994, in evidence to the then Select Committee on the Parliamentary Commissioner for Administration. Further information can be found in Annex A of the Cabinet Office publication “The Ombudsman in Your Files”. The Ombudsman’s examples of maladministration are repeated here for ease of reference:

  • rudeness (though that is a matter of degree)
  • unwillingness to treat the complainant as a person with rights
  • refusal to answer reasonable questions
  • neglecting to inform a complainant on request of his or her rights or entitlements
  • knowingly giving advice which is misleading or inadequate
  • ignoring valid advice or overruling considerations which would produce an uncomfortable result for the overruler
  • offering no redress or manifestly disproportionate redress
  • showing bias, whether because of colour, sex, or any other grounds
  • omission to notify those who thereby lose a right of appeal
  • refusal to inform adequately of the right of appeal
  • faulty procedures
  • failure by management to monitor compliance with adequate procedures
  • cavalier disregard of guidance which is intended to be followed in the interest of equitable treatment of those who use a service
  • partiality, and
  • failure to mitigate the effects of rigid adherence to the letter of the law where that produces manifestly inequitable treatment.

13 Neither of the lists at paragraphs 11 and 12 are intended to provide a comprehensive definition of maladministration.

 

Overview

14 Important points covered in this section:

  • there are seven basic principles to be considered when determining whether or not maladministration (also referred to as official error) has occurred
  • all cases must be considered in detail and on their individual merits
  • advice can be found on what to do when the customer has died
  • deciding cases can be difficult but they have to be resolved and judgements made, sometimes a case has to be decided on a balance of probability
  • consideration has to be given to deducting any overpayment or overprovision of benefit from any proposed special payment before the balance of the payment is made
  • remember that particularly difficult cases should be referred to DWP Viewpoint.

Seven basic principles

15 Where maladministration has occurred, seven basic principles should be followed when considering redress. These are that

  • all mistakes are admitted and put right
  • a sincere and meaningful apology is offered
  • redress is fair and reasonable
  • as far as possible, redress restores the customer—or in very exceptional circumstances a third party—to the position that he or she would have been in but for the official error
  • due account is taken both of the need to provide a suitable remedy for the customer and the need to protect the public purse
  • arrangements for considering redress are made public
  • where it is possible to remedy an error by statutory means that option must be used rather than resorting to an extra-statutory or ex gratia payment.

Official error

16 For the purposes of this guide, the action or inaction by the Department leading to the problem caused for the customer, is defined as `official error’. The term encompasses any error occurring within any part of the Department and, exceptionally, other government departments (OGDs), statutory bodies and contracted bodies when acting on behalf of DWP. Mistakes made by OGDs, statutory bodies and contracted bodies not acting on behalf of DWP will ordinarily be the responsibility of those Departments or bodies.

Official error defined

17 Official error can be broadly defined as occurring when

  • a decision maker makes a wholly unreasonable or clearly incorrect decision
  • the requirements of the law applicable at the time were not followed
  • incorrect or inadequate action was taken
  • correct action ceased prematurely
  • a valid claim was overlooked or ignored
  • the customer was misdirected (that is, the customer acted on an incorrect or inadequate direction or instruction to his or her detriment).

When will official error not normally be accepted?

18 Official error will not normally be accepted when

  • a reasonable decision was given based on the facts available at the time but following receipt of further information, the decision maker decides to interpret them differently or the decision was overturned on appeal. The overturning of a decision by a decision maker or a higher tier of authority is a routine event clearly envisaged in legislation. It will not, therefore, normally give rise to a special payment unless the first decision was wholly unreasonable or clearly incorrect, in the light of evidence held at the time (see paragraph 99 et seq for descriptions of these terms); or the process was excessively and unnecessarily delayed
  • a decision was made on the understanding of the law at that time but it is later interpreted differently by a Social Security Commissioner or the Courts
  • the customer was ignorant of the law, did not seek advice and delayed claiming. This could apply when legislation is amended or new provisions introduced, as such changes are usually publicised by the Department
  • if helpful but not mandatory procedures fail. For example, the Department usually invites claims to Retirement Pension but legislation still puts the onus on the customer to make a prompt claim
  • specific advice or a recommendation given was factually correct in relation to a specific enquiry
  • actions taken by officials were justified in the pursuit of establishing or verifying benefit entitlement or maintenance liability
  • delays were caused by industrial action, whether within or outside the Department.

Information and advice

19 Officials should ensure that customers are given

  • full and accurate information (that is, general factual data which is not customer specific) and
  • general advice (for example, the promotion of Government policy – work is the best form of welfare; people should save for their retirement) to enable them to make their own decisions
  • specific advice where it is appropriate to do so (for example, information tailored to a customer’s individual circumstances and requirements, which may identify a number of options but does not indicate the official’s view of the best course of action). The specific advice provided should be full and accurate to enable the customer to make his or her own decisions
  • recommendations where specific business areas of the Department have specified that it is appropriate to do so (for example, a statement to a customer suggesting his or her best course of action). Under such specific circumstances, the member of staff may provide his or her view (as an official of the Department) of the best option for the customer. Care must be taken when providing specific advice or (where appropriate) a recommendation, to ensure that the customer’s personal circumstances are fully taken into account.

The circumstances in which information, advice or recommendations should be made can be found in relevant procedural guidance.

Decisions with a right of review or appeal

20 Under the Decision Making and Appeals (DMA) arrangements, customers are able to dispute a decision within one month of the decision being made. Disputed decisions can be re-examined and any mistakes corrected without the case having to go through a formal appeal process. Where an appeal seems appropriate, it should be established whether the customer has used the disputes process before the case is considered further. If the disputes process has been used but a Departmental error has not been corrected, the continued failure to rectify the mistake may constitute maladministration. This is especially so if the outcome of the disputes process misleads the claimant into believing that an appeal would not be successful.

Balance of probabilities

29 A decision on whether or not an official error occurred may ultimately depend on the balance of probabilities. It is not a case of giving the customer the benefit of any doubt. Nor is it necessary to prove a point beyond reasonable doubt. It is a matter of weighing the evidence and judging the most likely of any options. The decision must not be arbitrary, based on bias or prejudice and must be publicly defensible. If an error is accepted, the customer should be afforded redress which, as far as possible, restores him or her to the position he or she would have been in but for the error.

 

Categories of special payments

Overview

41 It is essential to categorise special payments accurately for Departmental accounting purposes, details of which are contained in paragraphs 45 to 64 of the “Financial Redress Administration Guide” (FRAG). All special payments in respect of financial redress for maladministration should be considered under the following categories:

Extra-statutory

  • loss of statutory entitlement

Ex gratia

  • actual financial loss
  • delay
  • consolatory payments
    • gross inconvenience resulting from persistent error
    • gross embarrassment, humiliation or unnecessary personal intrusion and
    • severe distress which has significantly impacted on a customer’s physical or mental health

 

Extra-statutory: Loss of statutory entitlement

Overview

43 A special payment must not be made where a statutory solution is available. Where incorrect or inadequate advice leads to a failure (for example to make a claim within the time limits) and all other conditions for benefit are satisfied, a special payment, equivalent to the benefit that would otherwise have been paid, should be made. The deduction of any overpaid benefit and the payment of interest for loss of use of the sum should be considered. A special payment may also be appropriate in respect of any linked benefit.

Definition

44 Loss of statutory entitlement refers to cases where official error has led to a customer losing entitlement to a benefit that would have been received had the error not occurred or had the case been actioned timeously.

Financial disappointment rather than a loss of entitlement

46 Misdirection generally involves the provision of incorrect or inadequate information and can apply to any benefit or other service provided by the Department. It may not lead to a loss of statutory entitlement but may lead to financial disappointment

Using statutory powers

47 Where an error has been made, a special payment must not be paid where a statutory solution is available. Thus a special payment will not be payable where

  • existing powers can be used to review decisions and backdate benefit
  • letters can be treated as claims and benefit paid on that basis
  • a claim to one benefit can additionally/alternatively be treated as a claim to another benefit.

Such powers are there to be exercised and must be used before considering a special payment. However, even if a statutory solution is found, where an error has occurred, a special payment for compensation for delay may still be appropriate However, even if a statutory solution is found, where an error has occurred, a special payment for compensation for delay may still be appropriate

Ex gratia – Actual financial loss

Overview

52 Actual financial loss considerations apply where maladministration (or official error) has resulted in a customer or third party incurring additional expense. A decision has to be made on whether that maladministration or official error led to actual financial loss.

Distinguishing between financial loss and financial disappointment

55 Financial loss must be distinguished from financial disappointment. For example, where the agency or business area has led a customer to expect benefit at a higher rate than that to which entitlement actually exists, he or she has not lost anything financially but will have suffered a financial disappointment.

What can be treated as an actual financial loss?

56 Claims for actual financial loss may include the following:

Additional costs

  • letters, phone calls, e-mails, faxes, fares and other travel costs
  • bank charges and/or fees
  • interest on credit cards
  • professional fees
  • accrued mortgage interest
  • costs arising from failure to make timeous payments into bank/building society accounts

Lost income

  • loss of earnings
  • loss of income on interest bearing accounts

Other losses

  • losses arising from the early encashment of endowment policies

The above list is not exhaustive. Claims in respect of other losses will be received from time to time. They should be considered on their own merits on a case by case basis.

Ex gratia special payments to compensate for unreasonable or exceptional delay

Overview

What is the legal position?

88 There is no comprehensive entitlement in law to interest for a period during which individuals or bodies may have been denied money to which they are entitled.

What about unreasonable or exceptional delay?

89 Delay is among the examples of maladministration quoted during the passage of legislation relating to the Parliamentary Ombudsman and this section explains when the Department will provide redress for unreasonable or exceptional delay.

How does the Department compensate for delay?

90 Where the arrears of benefit or child support maintenance concerned are at least £100 compensation for delay is considered. It is generally calculated as if it was an interest payment and, in line with HM Treasury guidance, is normally calculated on the basis of simple interest. Compound interest is however used if the delay has been for a very long period. The interest rate used is the Average Retail Shares and Deposits rate supplied by the Building Societies Commission – part of the Financial Services Authority. However, payment for delay will not be made where any compensation calculated is less than £10. In the vast majority of cases this approach provides reasonable compensation for loss of value or loss of use of the funds.

What if the person has incurred greater costs than those generally provided for?

91 Where the complainant has been forced, as a result of the maladministration, to borrow, either by loan or overdraft, a different approach may be appropriate. These are cases of additional expenditure that may be greater than the interest due under our normal formula. If that is the case, it might be appropriate to reimburse the actual interest paid instead of using the Average Retail Shares and Deposits rate.

What does the Department take into account?

92 In considering compensation for delay, the Department takes into account any relevant factors including:

  • the need to allow for normal delay – the span of time which normally elapses because of the administrative procedures properly involved in dealing with the matter. This does not mean that compensation is appropriate simply because this period has been exceeded – the test is whether the delay is exceptional or unreasonable
  • any contribution to the delay by the customer’s own conduct his or her actions or inaction which may be a material factor, and
  • the degree to which the customer can be considered to have suffered financially as a result of the delay.

Note: As stated above, an interest payment for delay will not be made where the arrears of benefit or child support maintenance concerned is less than £100 or any compensation calculated is less than £10.

Ex gratia – Consolatory payments

Overview

123 A consolatory special payment may be considered in very exceptional circumstances, where maladministration has had a direct adverse effect on the life of the customer or, much more exceptionally, on the life of another person, for example the customer’s spouse or another family member. For example, where official error has resulted in

  • gross inconvenience resulting from persistent error
  • gross embarrassment, humiliation or unnecessary personal intrusion
  • severe distress which has significantly impacted on a customer’s physical or mental health.

124 The customer does not have to demonstrate that he or she suffered any financial loss and the special payment should be considered regardless of whether or not any other form of redress payment has been made.

125 It should be remembered that all dealings with the Department, regardless of whether or not errors occur, do take time. Complying with the law can be frustrating or inconvenient and sometimes stressful. It is also natural for customers to feel annoyed, angry or upset at any mistake, even a relatively trivial mistake. But, regrettably, mistakes do happen.

126 This background inconvenience and frustration is not the context in which the Department would normally consider a consolatory payment. Nevertheless, in very exceptional circumstances a consolatory payment may be appropriate.

127 A consolatory payment will not be appropriate if the actions of the Department were reasonable and therefore do not constitute maladministration, given

  • the circumstances of the case and
  • the processes officials must necessarily undertake to establish or verify, benefit entitlement or child support maintenance liability.

128 Any consolatory special payment is to acknowledge and apologise for the way that we have treated the person. These payments, which are not intended to put a value on the distress suffered, will usually range from £25 to £500 but bigger payments may be made in appropriate circumstances. In extreme cases a much higher payment may be considered but is unlikely to exceed £2,000. Where the agency or business area considers consolatory payments that would in total exceed £2,000 are justified they should refer the case to DWP Viewpoint for agreement.

Gross inconvenience resulting from persistent error

Overview

129 A consolatory payment under this category is intended to cover situations where the errors made were so persistent and over such a protracted period of time as to cause the customer gross inconvenience in the pursuit of benefits, child support maintenance or pursuing a justified complaint about DWP matters. It is not intended that a payment should be made for general inconvenience arising from normal dealings with the Department, even when errors occur. These payments are exceptional and are intended to cover the more serious cases.

What is gross inconvenience?

130 It is difficult to give examples of specific situations that would give rise to payment under this category. Each case should be considered on its own merits. However, as a guide, it would be expected that the customer would have experienced a combination of some of the following:

  • very frequent and unnecessary disruptions to payments
  • unwarranted repetitive requests for the same information by the same agency
  • repetitive loss of information by the same agency
  • excessive use of customer’s time (where there is no actual financial loss – as this comes within its own separate category)
  • gross mishandling of complaints (sometimes referred to as `botheration’).

This list is not exhaustive but the examples above are the most significant.

Gross inconvenience – factors to be taken into account.

Has there been persistent error? If so, how serious were the errors?

131 Whether errors can be regarded as persistent as in paragraph 129, depends upon the regularity of the errors and the individual circumstances of the case.

How long have the errors persisted?

132 Whether the circumstances constitute persistent error may depend on the severity of the impact of the errors. Therefore there is a need to look at the overall circumstances of the case before deciding whether the errors have persisted for a sufficiently long period to warrant consideration of a consolatory payment.

Gross embarrassment, humiliation or unnecessary personal intrusion

Overview

140 This category of consolatory payment covers the situations where, through the action (or inaction) of the Department, a customer is unnecessarily placed in a position likely to cause gross personal embarrassment. This may have been caused either by error or failure on the part of the Department or may have arisen through an unnecessary personal intrusion.

What constitutes gross embarrassment?

141 Gross embarrassment, humiliation or unnecessary personal intrusion is best illustrated through some examples:

  • wrongful arrest
  • wilful misuse of information or position by officers of the Department
  • wrongful issue of a summons or a bailiffs order/summons
  • negligent action leading to incorrect identification of alleged parents
  • disclosure of sensitive information to a third party
  • unnecessary gathering of personal information
  • insensitive information gathering
  • inappropriate methods of information gathering.

Severe distress which has significantly impacted on a customer’s physical or mental health

What constitutes severe distress?

149 A payment for severe distress should be very exceptional and considered only when there has been a significant deterioration in a customer’s physical or mental health as a direct result of Departmental maladministration. In very rare cases, the severe distress may be experienced by another person, for example, a spouse or other family member, as well as, or rather than by, the customer.

Factors in considering payment for severe distress

Has there been error?

150 As in any other claim for a special payment it has to be established that there has been official error.

Has there been a serious impact upon health as a result of the error?

151 There has to be a direct link between the error made and the impact upon health. Bear in mind that there can be situations where the very involvement of the Department can be a cause of stress. Such cases would not merit a special payment unless the stress is severe and can be directly linked with a Departmental error.

Customer claiming to be upset, angry or distressed by an error is not sufficient

152 The fact that a customer may claim to be upset, angry or distressed by an error is not sufficient in itself to justify a special payment for severe distress. The impact must be serious.

Is there objective evidence of the impact?

153 The customer should normally be asked to provide objective evidence of the impact of the error on their physical and/or mental health. This may take the form of a report from a GP or evidence from an employer that the customer has been unable to work as a direct result of health problems arising from an error. Please note that other forms of objective evidence can also be accepted.

Cases where objective evidence may not be needed

154 In some circumstances it may not be necessary to obtain objective evidence. This will be where it is clearly self-evident that the error would have caused severe distress. An example of this is where a parent may be incorrectly informed of the death of their child. Such cases should be few and far between. It will often be to the customer’s advantage to obtain evidence of the impact in his or her case in order that any award can reflect the individual circumstances of the case.

What is the degree of impact of the error?

155 An error will impact upon the health of different people to a different extent. For special payment purposes, it is the degree and duration of the impact that is normally more important than the scale of the error. The more serious the impact, the greater the payment to be considered, subject to the following paragraphs.

Are there factors, other than Departmental error, affecting the customer’s health?

156 There will be cases where the objective evidence indicates that there have been other factors, such as personal problems, that have also affected the customer’s health. It will be necessary to decide the relative importance of these other factors and the error of the Department when reaching a decision on the special payment.

Is there a pre-existing health condition?

157 In many cases the customer may have a pre-existing health condition that has been affected by the errors of the Department. This does not preclude consideration of payment. The error may have caused a delay in recovery from illness or worsened the condition. In such cases, it will be necessary to ascertain the extent to which the errors have affected the pre-existing condition when deciding whether a special payment is due and how much should be paid. In doing so the agency should ordinarily establish the state of the customer’s health prior to the error, during the error and the likelihood of the customer’s health improving following resolution of the error.

What is the duration of the impact of the error upon the customer’s health?

158 Once it has been established that there has been a serious impact upon health as a result of error, it is necessary to consider the duration of the impact when deciding on the scale of payment.

https://sites.google.com/site/uklocalgovernment/maladministration

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/275187/financial-redress-for-maladministration-240114.pdf

Advertisements

3 thoughts on “Guide to Financial Redress for Maladministration

  1. Thank you so much for posting this information. I’m in the final stages of putting together a claim for maladministration and breaches of the Equalities Act, so this is invaluable to me. I’ve been searching for something like this but have been unable to find it. Is this from an official DWP guide?

    Thank you so much for an informative and very timely post.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s