DWP found guilty of maladministration

It is no secret that many landlords have had issues with DWP’s maladministration such as delays in setting up APA’s resulting in rental loss, some landlords turn to experts for assistance and to take the matter further by making a complaint to DWP on their behalf.

Once a complaint is made to DWPs complaint team a response should be made within 10 days, if you are unhappy with the outcome you can then escalate your complaint to ICE.

Bill Irvine aswell as CLS have referred a number of cases through ICE and DWP have been found guilty of maladministration! – but what does that really mean for landlords?

Below Bill provides a very detailed account:

I repeatedly encouraged private landlords to pursue complaints against DWP, concerning its abject failure to properly administer its Alternative Payment Arrangement (APA) scheme and comply with the commitments it made to Parliament, in this respect. Some of you may recall my open letter to DWP’s Director General, Neil Couling when I highlighted the serious extent of the problems. He dismissed my criticism as scaremongering!

Since then, things, on the whole, have got better, mainly through landlords voicing their collective concerns, but we’re still dealing with some serious historic cases where landlords lost substantial sums in rent.

Ms Joanna Walace, Independent Case Examiner (ICE) is responsible for the third stage of DWP’s Complaints Process. I was hopeful she would see the obvious merit in the landlords’ case for compensation and compel DWP to make good their losses, as suitable remedy for the wholly avoidable £Millions lost, through DWP’s incompetent handling of claims.

I made around 20 such complaints on behalf of PRS clients. After a scandalous wait of between 2-3 years, we’ve secured 5 separate ICE investigation reports. In each case, the Independent Case Examiner, has upheld our complaints of maladministration, but surprisingly concluded “compensation” inappropriate.

She points to the following factors in support of her conclusion:

1. There’s a contractual agreement between landlord & tenant; and
2. To make a “special payment” would, in effect, absolve the tenant from their responsibility for the rent arrears; and
3. The arrears remain collectable from the tenant by taking appropriate legal action. As such, the LL has not suffered any financial loss.

In the latest reported case, the landlord applied for an APA in July 2016 when the tenant’s rent arrears stood at £2100. DWP took no action until September 2016 when they wrote to the landlord advising the APA had been refused.

Why? – “The tenant had not consented to the APA”. The same tenant who had already misused £2100 worth of tax-payers money, at the landlord’s expense!

Undeterred, the landlord challenged this decision, but DWP remained of the view, it couldn’t do anything without the tenant’s explicit consent, even though there is no mention of “consent” being a requirement, in the UC regualtions before payment can be redirected to the landlord.

The ability to redirect payment to the landlord can be found in Regulation 58 of the UC (Claims & Payments) Regulations  – It make provision as follows:

Payment to another person on the claimant’s behalf

58.—(1) The Secretary of State may direct that universal credit be paid wholly or in part to another person on the claimant’s behalf if this appears to the Secretary of State necessary to protect the interests of— 

(a)the claimant;

(b)their partner;

©a child or qualifying young person for whom the claimant or their partner or both are responsible; or

Nowhere does it suggest “explicit consent” should be a consideration.  In fact, the very notion DWP needed to secure “explicit consent” from a tenant that has already misused, at least 2 months housing cost payments, with the probability he would simply compound his earlier delinquency, is simply absurd!

Imposing “explicit consent” to APA processing is an example of DWP unnecessarily fettering its discretion, which is unlawful!

DWP’s Tier-1 qualifying criteria suggests, if the landlord can produce evidence of 2 months’ rent arrears, redirection should immediately follow. Explicit consent was introduced as a Data Protection blanket, not as a reason for frustrating landlords attempts to secure the monies designed to offset part or all of the tenant’s liabilities to pay rent.

Back to the case example – In May and June, 2017 the landlord’s agent and myself wrote again. By this time the rent arrears stood at £8000. On 1st November 2017 DWP’s Operational Director acknowledged and apologised for its tardy approach and its staffs’ failure to implement Third Party Deductions for rent arrears. In this instance, DWP’s guidance suggests, it didn’t need consent to apply the rent arrears deductions. However, as the tenant was no longer in situ the Manager maintained there was nothing further, he could do.

A few weeks later I made the complaint to ICE fully expecting its investigation would produce a positive result. My expectations were fuelled by my experiences of dealing with the Local Government Ombudsman (LGO) where, over several years, I’d secured several compensation awards of up to £7000 for my landlord clients in almost identical HB/LHA circumstances.

In a recently reported LGO case the landlord was recompensed, in full, for her loss, caused by council maladministration. At the end of the report, the LGO states:

“20. Where the Ombudsman finds fault causing injustice, we seek to put the complainant back in the position they would have been if the Council had not been at fault. The Council should therefore pay Mrs X. I acknowledge that it cannot pay housing benefit twice for the same period. However, Mrs X should be recompensed for the money she did not receive due to Council fault.”

Had ICE adopted the LGO’s entirely sensible approach to the case cited earlier, the landlord could have expected around £6000 in compensation for the rent arrears accrued after the initial APA request was made.

Just to remind you, Parliament set out the purpose of APAs in a Commons publication dated December 2017 It states:

“Some of the safeguards the DWP has developed to mitigate potential risks to tenancies and landlords’ income streams resemble current arrangements within Housing Benefit for claimants living in the private rented sector. For example, it is possible to pay the rent to landlords on behalf of claimants in arrears.”

After my email exchange with Neil Couling and his Operational Director in August 2015, I secured DWP’s commitment, it would suspend payment of the tenant’s “housing costs element” on receipt of an APA request. Had that commitment been applied to our case, the tenant would not have been able to misuse £8000 in funds designed to offset his liability for rent.

Both ICE and DWP acknowledge the commitment was made, representing both a change of DWP policy and practice, in line with what happens in HB/LHA cases. However, ICE lamely, in my view, accepted DWP’s excuse, that the commitment was simply a mistake by the Operational Director, overlooking the fact, the original email was sent to Neil Couling, DWP’s Director General and its internal guidance supported the landlord’s position.

I challenged ICE’s conclusion, pointing to DWP’s guidance to staff, which confirms at paragraphs A4320/1 of DWP’s “Decision Maker’s Guidance”:

“The DM may suspend the payment of benefit immediately, either wholly or in part, where a question arises about the claimant’s entitlement to benefit or some component part of it”. 

With the support of the RLA we’ve consistently argued, in line with Judge Edward Jacobs rulings, in relation to HB that, in order to redirect payment to a landlord, the Decision Maker needs to supersede the original decision to pay the tenant.

ICE dismisses our interpretation of the law, which we believe is supported by the guidance and its Operational Director’s August commitment, based on UC legislation. Yet, ironically claims – “Ms Wallace has no role to play in considering the interpretation of legislation”. Instead, the letter suggests “Ms Wallace’s role relates solely to considering whether DWP has administered the relevant case in accordance with standard processes and procedures”. So, whatever happened to its Operational Director’s procedural commitment to suspend payment on receipt of the landlords’ application? Was that not a procedure, agreed at directorate level that should have been followed by DWP staff? Why did ICE conclude it was a mistake? We now know that ICE contacted DWP’s hierarchy on receipt on my challenge and agreed their stance. Not exactly independent!

As things stand, I’m anticipating all the ICE complaints will produce the same outcome. Maladministration agreed, but no compensation offered, due to ICE’s rather naive view, the landlord can secure payment for the rent arrears, through the courts. Landlords know from experience that’s just not realistic!

Eminent Upper-tier Judge, Edward Jacobs adopts a much more informed and realistic view in his HB decisions, involving failures by councils to apply direct payments to landlords, where he recommends compensation and opines:

“I sympathise with the landlord in this case. My inclination throughout has been to allow a further payment if possible. Of the claimant, the local authority and landlord, it is the landlord alone who is not at fault. The claimant failed to pay her rent. The local authority failed to notify its decision. The landlord alone acted promptly and properly.”

The Judges remarks could just as easily be applied to each of the landlords’ complaints I’ve submitted to ICE.  But, as things stand, ICE expects landlords to pursue legal action for their loss, even though, as Judge Jacobs rightly comments, this is unlikely to produce the desired effect and, most probably, would incur further costs to the landlord. In contrast, DWP’s abdication of its duties to comply with its own APA scheme; its commitment to Parliament to protect the interests of tenants from repossession action and their landlords from rental loss; and fulfil the Secretary of State’s obligations to protect the public pursue from abuse, have been practically absolved Ms Wallace.

As things stand, DWP has got off with a slap over the wrist, while the affected landlords face the prospect of failing to comply with their own obligations to lenders, due to the levels of their losses. Not surprisingly, those same landlords are seriously questioning the independence, objectivity and impartiality of ICE. The fact its email is ICE@DWP.gov.uk; it takes 2-3 years for its investigation report, and all recommended remedies have so far undermined the landlords’ position, serves to reinforce that view. It also clearly has little or no understanding or empathy for the landlords’ position as to date it’s only been accustomed to dealing with disappointed claimants.

Despite all these concerns, if you’ve encountered unnecessary rental loss and currently are pursuing cases with DWP and/or ICE, don’t be put off. It’s better you continue prosecuting your cases and exposing what’s happening to your MPs and MSPs. I’ve already referred one of the cases to the Parliamentary Commissioner (Ombudsman) which is the last leg of the process. Hopefully, we’ll secure a much better outcome.

Whatever happens, I’ll keep you updated.

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