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First Report Session 1998-99
Volume 3 - 1st Report - Session 1998-99
DEPARTMENT OF THE ENVIRONMENT, TRANSPORT AND THE REGIONS
Failure to notify members of a savings scheme of its termination
Matters considered:
Ms X complained that the Department of the Environment, Transport and the Regions (DETR) had failed to notify her that the Home Purchase Assistance Scheme (HPAS), of which she was a member, was to be discontinued; and as a result she had lost the opportunity of benefiting under the scheme.
Summary of case
In October 1985 Ms X registered with the National Savings Bank (NSB) as a saver under HPAS, a DETR scheme which offered financial benefits to first-time home buyers who had saved for at least two years under it. In 1988 the Government decided to end HPAS and that the last date for claiming benefit under it should be 31 March 1993. As there had been no requirement for savings institutions such as NSB to keep a record of their customers who had registered under HPAS, and as DETR had no record, there was no straightforward way of contacting those who were affected. In February 1989 DETR sent the savings institutions a leaflet about the closure of HPAS which they asked them to issue when dealing with customers who were thinking of joining the scheme, or who they knew had already joined. In March 1990 DETR issued a press notice about the end of the scheme. In December 1996 Ms X complained to NSB that when she had applied to DETR for assistance under HPAS she had learned that the scheme had been discontinued. She asked NSB to compensate her for her financial loss. NSB replied that as control of HPAS had been in the hands of DETR it was not appropriate for NSB to consider compensating her.
Findings
I found that DETR's lack of foresight in failing to ensure that participants in HPAS could be readily identified if necessary had made communication of the scheme's closure to those concerned ineffective and thereby frustrated the Government's intention in winding up the scheme that existing savers should be given ample opportunity to obtain the benefits available. The effect of that maladministration upon Ms X had been to deny her the promised and intended opportunity to benefit from the scheme and therefore also the opportunity of making an informed decision about the use of her savings.
Remedy
DETR agreed to compensate Ms X by way of an ex gratia payment equivalent to the benefits available under HPAS, and to consider compensating other participants who might be in a similar position.
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