Home > Publications > Selected cases — Parliamentary > Selected Cases and Summaries of Completed Investigations: April 2001 to September 2001 > Case No. C.1035/01
Selected Cases and Summaries of Completed Investigations
PCA 6th Report – Session 2001-2002
Chapter 1
DEPARTMENT FOR WORK AND PENSIONS Child Support Agency: delays and errors caused actual financial loss
Some nine months after a decision by an appeal tribunal, the Child Support Agency (CSA) reduced Mr C’s maintenance assessments, and altered a deduction from earnings order used to collect payments of child support maintenance. On hearing that he would receive a substantial repayment (of £2,631) Mr C promptly booked a family holiday overseas. Some ten weeks later he also decided to change his car, entering into a financial agreement over three years. Nearly four months later CSA told Mr C that they had made a mistake in their implementation of the tribunal’s ruling. They made fresh assessments and told Mr C initially that he owed arrears of £3,854. CSA refused to make good Mr C’s claimed financial losses. The Ombudsman established that CSA should have made a manual calculation following the tribunal’s ruling: instead, they had used an inappropriate computer program. CSA eventually accepted that their actions had caused Mr C to alter his financial circumstances to his detriment. They decided to meet part of his costs in the amount of £1,895.38. They also paid £200 to Mr C by way of consolation and £20 for incidental expenses.
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Full text
12.1 Mr C complained that the Child Support Agency (CSA), an executive agency of the former Department of Social Security, had repeatedly miscalculated his child support maintenance liability and mishandled his case. He said that CSA’s mistakes had caused him to incur substantial arrears of child support maintenance, and that their failure to review his case timeously had caused him to suffer distress and financial loss.
12.2 My investigation began in February 2001 once the Ombudsman had obtained comments from the Chief Executive of CSA. I have not put into this report every detail investigated by the Ombudsman’s staff; but I am satisfied that no matter of significance has been overlooked.
Background
12.3 CSA are responsible for the assessment, collection and enforcement of child support maintenance. A parent with care completes a maintenance application form which provides information about the non-resident parent. CSA then send an enquiry form to the non-resident parent to obtain a financial statement so that maintenance can be assessed in accordance with a standard formula. Mr C and his former wife (to whom I refer as Mrs X) each had responsibility for one child of their marriage: he for their son, she for their daughter. Hence both were parents with care and non-resident parents (although my investigation is confined to Mr C’s role as the non-resident parent). CSA treat each family unit on its individual merits under the relevant child support regulations.
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12.4 The date from which a non-resident parent’s liability to pay maintenance starts is known as the effective date. If (as here) there is no existing court order for maintenance and the enquiry form was issued after 18 April 1995, the effective date is eight weeks from the date on which the form was sent or given to the non-resident parent, provided that he has returned it within four weeks of issue; given his name and address; and confirmed that he is the parent of the children named in the other parent’s application to CSA. If the non-resident parent fails to meet those conditions, the effective date is the date on which the enquiry form was sent or given to him. There is often a lapse of time between the effective date and the start of payments, during which time arrears of maintenance will accrue; that is known as the initial payment period.
12.5 Until 31 May 1999 maintenance assessments were made by child support officers based in regional CSA centres, supported by a network of field offices which dealt with enquiries, interviews, information gathering, visits and court action. Mr C’s case was dealt with by the centre in Belfast. Since 1 June 1999 a new decision making and appeals system has been in place, and periodic reviews have been replaced by case checks. All decisions are now made by decision makers on behalf of the Secretary of State. Reviews under what were sections 16 to 19 of the Child Support Act 1991 have been replaced by revised or superseded decisions, known as revisions or supersessions.
12.6 Where other methods of collection have failed or seem likely to fail, CSA may seek to enforce payment of maintenance. CSA first contact the non-resident parent to ask him to arrange full payment of the arrears or, where that is not possible, to negotiate an arrangement to pay instalments. Where a voluntary arrangement is not reached, or is broken, and the non-resident parent is in paid employment, CSA may impose a deduction from earnings order on his employer to secure payments of regular maintenance and arrears.
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12.7 Under the Department for Work and Pensions’ non-statutory scheme of redress for maladministration, consideration may be given to paying compensation if official error or unreasonable delay has led to actual financial loss. The general aim of the scheme is to put those suffering as a result of maladministration back to the position they would have been in had the maladministration not occurred. Departmental guidance states that if a customer has relied on incorrect information to alter his or her circumstances to their detriment a special payment should be considered for financial loss actually suffered. The Department considers whether it was reasonable in all the circumstances for the customer to have accepted in good faith, and to have acted upon, the incorrect information provided. Exceptionally, and upon the provision of medical or other suitable evidence, a consolatory payment may be awarded if the aggrieved person has suffered severe distress in consequence of a departmental error.
12.8 CSA’s departures scheme, which was introduced on 2 December 1996, allows that once a maintenance assessment has been made using the standard formula, parents may apply to depart from the formula to take account of special expenses or exceptional circumstances. One of the grounds on which an application may be made arises when a parent believes that his or her former partner enjoys a way of life which seems more appropriate to someone whose income is much higher than the income on which their assessment has been based.
12.9 It is not for the Ombudsman to assess child support maintenance; that is a matter for the adjudication and appellate authorities. The investigation is concerned with CSA’s administrative handling of Mr C’s case.
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Summary of events
12.10 On 16 May 1995 CSA issued an enquiry form to Mr C, which he returned on 7 August. Following further enquiries a child support officer on 20 September made a maintenance assessment of £76.21 a week, effective from 17 May, and told Mr C that he owed £1,818.15 by way of arrears. Mr C questioned whether CSA had any jurisdiction in the matter, and asked them to review a number of alleged discrepancies in the assessment. On 7 January 1996, as Mr C had not started making payments, CSA imposed a deduction from earnings order to recover regular maintenance at £330.24 a month and £184.61 a month towards the arrears. Subsequently CSA asked Mr C’s employer for more details of his earnings, following receipt of which they revised the assessment as follows:
£74.55 a week from 17 May 1995
£81.09 a week from 27 December 1995
£79.31 a week from 31 January 1996
£79.90 a week from 8 Apri11996.
12.11 On 16 October 1996 Mr C appealed against the review on the grounds that he and Mrs X had previously agreed each to care for one child of the marriage and not to seek maintenance through CSA. On 2 September 1997 an appeal tribunal decided that the assessment should be revised to take account of Mr C’s increased earnings and other adjustments. CSA imposed a revised deduction from earnings order to collect regular maintenance only, but did not re-calculate the assessment in the light of the tribunal’s findings until March 1998, when they notified revisions:
£62.88 a week from 17 May 1995
£61.91 a week from 31 January 1996
£63.13 a week from 8 Apri1 1996.
12.12 Mrs X immediately contested the revised assessments, which CSA subsequently confirmed as being correct. Much later they told her that she could appeal. CSA did not enter the revised assessments on Mr C’s account until 24 February 1999, when they calculated that he had overpaid child support maintenance of £2,631.38. They refunded that amount to him the following month and revised the deduction from earnings order to reflect the new lower rates.
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12.13 In June 1999 CSA noted that the maintenance assessment was incorrect and on 13 August they revised it as follows:
£81.13 a week from 17 May 1995
£79.35 a week from 31 January 1996
£80.15 a week from 8 April 1996.
They adjusted Mr C’s account and told him that he owed arrears of child support maintenance of £3,854.73. CSA reduced the arrears by £633.52 in October to reflect Mr C’s successful application for a departure assessment (paragraph 12.8) effective from 2 December 1996.
CSA’s comments on the complaint
12.14 The then Chief Executive of CSA offered her personal apologies to Mr C for the Agency’s miscalculation of his maintenance liabilities following his appeal. She said that after erroneously refunding child support maintenance payments to Mr C in March 1999, CSA had realised their error and had re-calculated the arrears the following June. She acknowledged that Mr C had not received the standard of service to which he was entitled; and CSA had awarded him £150 for the gross inconvenience suffered together with £20 for out-of-pocket expenses. The Chief Executive did not accept that CSA were responsible for any debts resulting from long-term commitments entered into by Mr C.
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Later developments
12.15 The Ombudsman’s staff asked CSA about the delays in completing case reviews and the technical reasons for the error in the calculation following the appeal. CSA explained that no review was completed in May 1997 because the maintenance assessments had been reviewed in the course of the appeal. They said that the impact of that was to advance the date for the next review to April 1998 although that was not completed until January 2000. That review led to two further reassessments, which reduced Mr C’s arrears by £548.97. A further review altered his maintenance assessment to £258.57 a month (£59.67 a week) with effect from 12 April 2000; and CSA subsequently agreed to collect arrears at a statutory minimum amount of £22.53 a month (equivalent to £5.20 a week). Under the new (non-statutory) system of review (paragraph 12.5) Mr C’s case would not receive another check until April 2001, if appropriate. As at November 2000 his arrears were £1,613.12. In the meantime CSA conceded that their delays in carrying out the latest case check had caused further aggravation to Mr C, for which they made another consolatory payment of £50 on 17 March.
12.16 . As for the calculation error, CSA said that a problem with the computer system was to blame in that counter-claim cases were treated like multiple assessment units. The program took the maintenance requirement figure from the non-resident parent’s claim for maintenance and included it in the total maintenance requirement. That resulted in the non-resident parent’s income being apportioned between two assessment units, when it should have been taken fully into account. CSA said that the decision maker needed either to suspend the linked claim or to calculate maintenance assessments clerically.
12.17 In his original submission to the Ombudsman in support of his complaint Mr C said that he had incurred expense he otherwise would not have incurred but for the serious error made in the calculations made in March 1998. He said that his own enquiries of 22 February 1999 had established that he would receive a substantial refund of child support maintenance. On the strength of that his family and friends - another family of three - had immediately booked a Christmas holiday abroad. Mr C submitted to the Ombudsman’s staff a copy of the travel agent’s booking details of 22 February. Mr C’s share of the cost was £1,695.75. He paid an initial deposit of £146.40, with a further payment of £165 due before 4 May and the remaining balance of £1,384.35 due before 13 October 1999. Mr C also explained that he had given his son £200 spending money, and that the rest of the “windfall” payment had been anticipated as holiday spending money.
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12.18 That was not Mr C’s only extra financial commitment: he had changed his car in anticipation that his monthly payments of child support maintenance would fall considerably. Mr C sent to the Ombudsman’s staff a copy of the details of the transaction agreed on 8 May 1999. Those showed that Mr C owned outright his previous car which he traded in for another second-hand car. He had taken out a loan - with monthly payments of £104 over three years - to finance the balance. Mr C signed the finance agreement on 13 May 1999.
12.19 Finally, the Ombudsman’s staff asked Mr C to comment on the proposition that he could reasonably have expected his weekly maintenance assessment to increase, rather than decrease, following the appeal tribunal’s decision. He said that he had assumed, evidently wrongly, that CSA’s decision had included the periodic review due in May 1997. Mr C also said that he had always found the formula for calculating child support maintenance to be a “mystery” and that he was entitled to expect the intervention of the tribunal to have brought finality to his position.
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Findings
12.20 Before dealing with the substance of Mr C’s complaint I comment briefly on two other aspects. First it took well over two years to decide his departure application. Even though, as I understand it, CSA’s specialists (who deal with all such applications) were coping with very large workloads, that was a very poor performance. Nevertheless, the impact of the eventual decision has been taken into account in the adjustments CSA made to the arrears of child support maintenance. As for the alleged failure to carry out reviews, I have noted above the downward impact on Mr C’s maintenance assessment following the various reviews and case checks that have now been carried out. I pass on the assurances of the Chief Executive that the late timing of those reviews has not impacted adversely on Mr C’s position.
12.21 I do not regard it as surprising that Mr C should have made certain assumptions with regard to reviews, and in particular concerning CSA’s decisions of March 1998. It appears that the appeal tribunal’s decision of 2 September 1997 was influenced substantially by matters that CSA themselves raised in their written submissions to the tribunal. CSA should therefore have been able relatively quickly to implement the tribunal’s ruling. Instead it took six months. Not only was that delay bad, but CSA made errors in carrying out what the tribunal had asked. In all the circumstances I find much to support Mr C’s rhetorical question (as put to the Ombudsman) of how was he to notice any inconsistency when it took CSA so long to discover their mistake?
12.22 How did CSA’s error arise, given that no explanations, and only belated apologies, were given to Mr C? As I understand the explanation given to the Ombudsman by CSA (paragraph 12.16) the entries made to CSA’s computer led them to regard Mr C as the non-resident parent of more than one family unit. His income was accordingly apportioned for the purposes of calculating his maintenance assessment. I conclude that one of two things went wrong. Either there was a systemic fault in CSA’s computer program; or the officer dealing with Mr C’s case failed to bypass the computer by making alternative manual arrangements. When I put that point to the Chief Executive he said that the problem was one of long-standing. In March 1997 CSA had issued a circular to staff detailing the appropriate procedures in cases like Mr C’s: in short that calculations by computer should be suspended in favour of clerical calculations. That explanation enables me to be satisfied that the maintenance assessments calculated on 3 March 1998 defied clear departmental instructions. Accordingly the decisions were flawed. As it was, CSA had available all the information they needed. And they presented their decision as being derived directly from the tribunal’s ruling: normally final subject to challenge on a point of law only.
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12.23 In retrospect it can be seen that the concerns expressed by Mrs X about the March 1998 decision, on at least two occasions, were well founded. During the subsequent period CSA had ample opportunity to check the true position. Indeed, they told Mrs X that they would recall the case papers from storage. As I see it, they could have put right the mistake at a time when the impact upon Mr C would have been minimal. Instead, and only after prompting by Mr C himself, they refunded an overpayment which had seemingly arisen as a result of further inexplicable delays of almost a year in adjusting his child support maintenance account. I now turn to Mr C’s claim of financial loss. For consideration is whether in the terms of departmental guidance Mr C acted to his detriment (paragraph 12.7). A distinction must also be made between a financial loss and a loss of expectation. As I see it Mr C was entitled to regard the March 1998 decision as final – except in so far as any changes in his or the parent with care’s circumstances altered his maintenance assessment. I see a direct link of timing between CSA’s acceptance that Mr C would receive a substantial repayment and his commitment to the Christmas holiday of a lifetime. Mr C appears not to have learned about CSA’s error until 1 September 1999, over six months after he had booked his holiday. Although Mr C received promptly the figures which informed the revised assessments, he received no explanation as to why an error had been made. That omission was itself maladministrative; and I note that a proper explanation for what had happened emerged only during the course of my investigation (paragraphs 12.16 and 12.22). Furthermore, I cannot trace among CSA’s surviving papers any reply to the Member’s representations of September 1999. Strictly speaking, Mr C could have pulled out of his holiday in the remaining six weeks or so before the final balance became due on 13 October. Had he done so his financial losses might have been restricted to the £311.40 already paid (paragraph 12.17). But there was the position of his family to consider and also that of the other family. Crucially in my view Mr C could have had no confidence based on such a dearth of information that CSA, two years after the event, had correctly implemented the tribunal’s decision. I accept that it was not unreasonable for him to have gone ahead with the holiday as planned.
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12.24 I now turn to Mr C’s decision to change his car. As I understand his argument, Mr C relied on the finality of the same March 1998 decisions, put into effect only after his personal intervention the following February. I bear in mind that he had cleared his original arrears of child support maintenance by around August 1997. And from March 1999 onward he would be better off by £72.67 a month – the difference between the old earnings order of £346.23 a month and the new one of £273.56 a month. I find on balance that Mr C took on a second new financial commitment, in respect of his car, as a consequence of a departmental decision tainted by maladministration. In practice he had no option but to keep up his payments in the face of financial penalties or repossession of the car.
12.25 The approach which the Ombudsman considers correct in cases of this kind is that a person who has suffered injustice as a result of maladministration should be put back in the same position he or she would have been in (where practicable) had there been no maladministration. In the light of my findings above I invited the Chief Executive of CSA to have Mr C’s case looked at again with a view to offering compensation for actual financial loss. After a number of exchanges, and consultation by CSA with Department for Work and Pensions’ headquarters, the Chief Executive said that he accepted that Mr C should be compensated at least in part for his financial loss. The Chief Executive said that any decision by Mr C to go ahead with the holiday would have been taken in the knowledge that, if CSA’s decision was correct, he would have to meet some of the cost out of his own funds. In that knowledge he decided to proceed. Nevertheless, in the particular circumstances of the case, CSA decided to make a contribution of £761.40 towards the cost. That comprised £311.40 for deposits paid (paragraph 12.24); £200 spending money given to Mr C’s son (paragraph 12.17); and an additional £250 for the contributory confusion caused by CSA’s inadequate explanations. The Chief Executive said that Mr C appeared to have interpreted the revised maintenance assessment as being fixed (similar to a court order) and that it was not likely to increase. That was not so. On the other hand, CSA accepted that Mr C had greater strains placed on his finances, when replacing his car, than he could have anticipated. For the period up to May 2001 they calculated that Mr C had outgoings £808.20 greater than he had anticipated when entering into his financial agreement. (In May 2001 CSA told Mr C that they would defer the sum of £1437.61 from his arrears – that is he would not have to pay that sum.) In the expectation that Mr C would pay regular maintenance at £321.10 a month until the case was closed in December 2001, they considered that Mr C would pay £325.78 more than he had expected. CSA accordingly decided to recompense £1,133.98 (£808.20 plus £325.78) in recognition of financial losses attributed to Mr C’s car purchase. Taken with the award of £761.40 in respect of the holiday CSA were thus proposing redress totalling £1,895.38. I regard that as fair and reasonable in all the circumstances. In the light of the deferment of £1,437.61 already offered CSA would be authorising a special payment of £457.77 to Mr C. (CSA are taking steps to ensure that Mrs X receives the full amount of child support maintenance due to her.)
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12.26 I mention finally that I see no grounds for challenging CSA’s previous attempts to collect child support maintenance properly due from Mr C. In the absence of maladministration he would have been required to make slightly higher payments than before his (technically successful) appeal to the tribunal. I regard CSA’s payments totalling £200 to Mr C for what might be called “botheration” for the very poor handling of his case, and £20 towards personal expenses (paragraphs 12.14 and 12.15), as being reasonable.
Conclusion
12.27 CSA handled Mr C’s case very poorly after the intervention of the appeal tribunal. I welcome their recent acknowledgement that their actions caused Mr C to suffer financial loss, and also their decision to offer recompense totalling £1,895.38. I regard that, the Chief Executive’s apologies, and the £220 payment for consolation and incidental expenses as a suitable outcome to Mr C’s complaint.
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