When the Department for Work and Pensions gets a claim wrong, the claimant often ends up out of pocket, in debt, distressed and disadvantaged. The DWP can offer compensation if that happens – but how many people have been offered this as a matter of course, even if a claim has gone spectacularly awry?
Like most other public bodies, the DWP can award “special payments” to people who have been affected by maladministration of a benefit claim. The scheme aims to restore a person to the financial position they would have been in had the errors in administration not happened. But where maladministration has had an adverse effect on a person’s life or well-being, “consolatory payments” may be awarded regardless of whether there has been financial loss.
“Special payments” are discretionary, and are not awarded by statutory decision makers so there is no right of appeal, although they can be reviewed.
Maladministration is defined as an incorrect action or inaction by the DWP that has a detrimental effect on a person. This could be an unnecessary delay in dealing with a claim, a failure to apply the law correctly, a failure to follow correct procedures, or giving incorrect, inadequate or misleading information.
Compensation can cover actual financial loss, delay, loss of statutory entitlement and consolatory payments.
Actual financial loss would mean the direct costs to the claimant of the DWP getting it wrong such as sums spent on telephone calls, letters, travel to the office to follow through an error, or bank charges imposed because of late payment.
Three conditions must apply before compensation for delay can be considered: maladministration must have contributed to the delay; arrears of benefit must be £100 or more; and the period of delay must exceed set limits. (For example, incapacity benefit, four months; income support and pension credit, two months; jobseekers allowance, three months; retirement pension, eight months).
If these conditions are met, and the claimant requests compensation, payment is based on prevailing interest rates, the amount of benefit that the claimant is due and the length of time that has elapsed since the end of the set period listed above. Delay will not be compensated if interest calculated is less than £10.
Compensation can also be paid if maladministration caused someone to lose entitlement to benefit.
Consolatory payments are different in that there must be a direct effect on the claimant’s life or well-being. They are not intended as recompense for financial loss.
They should be considered where the claimant has suffered gross inconvenience resulting from persistent error, gross embarrassment, humiliation or unnecessary personal intrusion, and severe distress.
The customer has to describe how they have been affected by the maladministration and provide objective evidence – which may include medical evidence – that harm has occurred. The evidence should give details of their health or well-being before, during and after the maladministation. Maybe extra money for tearing their hair out could be considered?
Gary Vaux is head of money advice, Hertfordshire Council. He is unable to answer queries by post or telephone. If you have a question to be answered please write to him c/o Community Care.