The UK is in recession and jobs are disappearing fast. People on benefits need to avoid those who wish to exploit them, says Gary Vaux
The economic recession is bringing out the best and worst in people it seems. Unfortunately, it’s the worst that often affects social work clients the most.
For example, there are now several organisations who have set themselves up as freelance benefit advisers and they are frankly exploiting the newly unemployed and others who might be unfamiliar with the benefit system.
One organisation is charging people £1.50 a minute on a premium rate number to give advice about benefits, that anyone can obtain for free from a local welfare rights agency or Citizens Advice Bureau. Another is offering to help represent people at appeal tribunals but will take 35% of the proceeds (plus expenses) as their “fee”.
One organisation, Benefits Information Services of Chorley, Lancashire, has been somewhat hampered, however, because the founder, Paul Brennan, was recently found guilty of carrying out acts designed to pervert the course of justice.
Brennan wrote a letter listing ways that a client could lie about her disabilities to ensure a tribunal paid up. In the letter he told the client to tell a string of “white lies” and then “outright lies” to the tribunal. He also wrote “don’t tell the tribunal chairman about this letter”.
But, in what he described as a “monumental cock-up”, he sent the letter destined for his client to the tribunal panel instead! At a trial at Newcastle Crown Court in December 2008, Brennan, 46, denied the offences but was found guilty by the jury.
It’s not just in benefit claims where criminal activity is taking place however – Revenue and Customs have warned all taxpayers that they should beware of e-mails, apparently from HMRC, offering tax refunds. The e-mails look very convincing, refer to relatively small sums of money, and it’s easy to be fooled. However, like e-mails from phoney banks and building societies, the fraudsters are simply interested in obtaining bank or credit card details.
HMRC has confirmed, however, that they never notify rebates by e-mail or phone and that any e-mail purportedly from them about rebates should be sent on to firstname.lastname@example.org.
Some of the money-making schemes aren’t illegal of course. Provident Personal Credit offers small cash loans and home collection to people who find it hard to obtain credit anywhere else – but at a very hefty price. Their website boasts that getting a loan is “as easy as tea and biscuits” but can’t hide the fact that there is an interest rate of 189.2% on some loans. Its website cites an example of a loan of £300 being repaid over 57 weeks at £9 a week. This will cost £513 to repay. A £500 loan repaid over 31 weeks actually comes in at 365.1% APR.
Another company has set itself up as a charity to offer debt advice and management but it actually passes a number of its clients to commercial independent financial advisers, who have paid that company to put work their way. These advisers then charge the debtor quite exorbitant fees to set up individual voluntary agreements.
● Gary Vaux is head of money advice at Hertfordshire Council. He can be contacted through email@example.com