Financial inclusion commissioner Johnny Timpson has called for the Department for Work and Pensions' vulnerable customer policy to be brought in line with the financial services sector.
It comes after Timpson resigned from the prime minister's Dementia Friendly Communities Champion Group in protest over the current carers benefit repayment system.
Explaining the issue, Timpson said for people who are in receipt of carers allowance or pension credit, the onus is currently on them to inform the DWP if they have been overclaiming.
“Obviously paying back money when you've overcharged is fine, but the sheer complexity of trying to evaluate that as well as trying to juggle being a carer, that’s quite a tall ask,” he said.
Explaining the scope of the issue, Timpson pointed out there are around 7.7mn carers in the UK, 1.4mn of which are claiming carers allowance.
Similarly, there are 1.4mn people currently claiming pension credit.
However, Timpson warned that both pensions credit and carers allowance are “actually quite complex benefits”, especially if someone is living with a condition such as Alzheimer’s or Dementia.
Timpson pointed out that carers allowance is a “fairly conditional” benefit as you can only claim for it if the person you are caring for is claiming a number of benefits.
Consequently, “you can very easily find yourself in a situation where you’ve moved out of the threshold criteria for eligibility of the benefit and you’re overclaiming”.
Vulnerable customer policy
Explaining his criticism, Timpson pointed out the DWP does have a vulnerable customer policy but it has the requirement for vulnerable people to flag to the department if they are being overpaid.
He contrasted this to the vulnerable customer policy practice that is operating in financial services and utility sectors.
“Government departments require them to focus on vulnerable customers, use their own data to identify vulnerable customers, and make interventions as quickly as possible to improve vulnerable customer outcomes,” he said.
Timpson said the DWP is data rich and using AI and machine learning but it is still putting the onus on the benefit beneficiary to report the fact they’ve been overpaid.
“The DWP is out of step with the expectations that the Treasury have of financial services firms and there needs to be some consistency.”
Progress
Timpson’s decision to resign came as a result of a lack of progress on this issue in recent years and a desire to bring attention to it.
“This is not a new issue, this has been a known issue for five years and there’s been little progress made to address it by the DWP,” he said.
By failing to address this issue, Timpson warned it could become a “major crisis”.
“What I’m asking of the DWP is to review their vulnerable customer policy in practice, and bring it into line with what is happening in the financial services sector and other regulated sectors.
