Investigators will have access to suspected fraudulent benefits claimant accounts for three months before they are informed
Vital new details about the powers that the government is aiming to give to the Department for Work and Pensions have emerged – including how people having their bank account investigated won’t be told. A House of Lords debate yesterday heard from the Governemnt about how they have made amendments to the controversial scheme.
Under the Public Authorities (Fraud, Error and Recovery) Bill which is going through the Houses of Parliament, the Public Sector Fraud Authority (PSFA) is set to get extra powers to investigate suspected fraud. The draft law seeks to curb multibillion-pound benefit fraud and includes allowing the Department for Work and Pensions (DWP) to recover money directly from fraudsters’ bank accounts.
It would also allow the DWP to have the power to obtain bank statements from people they believe have enough cash to pay back welfare debts but are refusing to do so. Courts could also suspend fraudster’s driving licences after an application by the DWP if they owe welfare debts of more than £1,000 and have ignored repeated requests to pay them back.
In the Lords debate The Minister of State, Department of Work and Pensions Baroness Sherlock explained that orders would be made to recover money direct from bank accounts and deduct from salaries. She explained that banks were being told not to tell the people being targeted that anything was happening for three months – go stop them removing the cash.
She said that some new amendments “Seek to clarify the obligations of financial institutions not to disclose that they have received an information notice under the new power enabling direct deduction orders—DDOs.
“Under the debt recovery provisions financial institutions are prohibited from informing account holders that the PSFA or the DWP has requested account information. This is to militate against attempts to avoid the powers—for example, by moving money out of the account before a DDO is issued.
“These amendments clarify that the prohibition ends three months after the notice is given to the bank, or sooner if a pre-deduction notice is subsequently given. Three months is long enough for the DWP or the PSFA to have assessed a debtor’s ability to repay and the affordability of repayments, and to issue a first notice as appropriate. These amendments remove any doubt as to how long the prohibition lasts, ensuring the requirement is proportionate and not overly burdensome.”
Baroness Sherlock explained that once a decision has been made on if a person will have money removed they will be informed their account has been examined. She said: “Once the information has been properly assessed and any pre-deduction notice given to the bank, account holders can be told that the information was requested. Where a DDO is proposed, the account holder, and a joint account holder if applicable, will be notified in writing by the PSFA or the DWP of their right to make representations regarding the proposed deductions before any are taken.”
If people are trying to avoid paying by moving money to different accounts Baroness Sherlock said they would be in breach of a restriction “on the account holder not to do anything that might frustrate the effect of the pre-deduction notice or the order. If they do, they become liable to pay a civil penalty.” She added that people could be disqualified from driving if ‘someone persistently fails to pay by frustrating a DDO.”
Latest official data has revealed £9.5 billion is estimated to have been overpaid in benefits in the year to the end of March, with fraud accounting for most of that sum.