Sharing info with fraud investigation

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    We were recently asked by the local benefit authority’s fraud investigators about the claimant starting work; we gave them honest information about what we knew, he had said to us that he “hoped to start work soon.” The authority now wants to seek an over payment from us saying that we should have shared the information with them! We are now thinking about not cooperating with the fraud investigators if we are going to be prejudiced like this.Surely if the investigators want information it should be non-prejudicial?If we refused to cooperate or be selective with sharing information where does that leave the investigators?


    This is a difficult one to answer without know what capacity you are acting in. I’m guessing as a landlord? In which case you did not appear to have any information to share with the investigators and so I do not see how you can have failed to do so.

    Julian Hobson

    This is an interesting one. Lets test the new reg 101, it states:

    [i:7ce8a2caf6]“(2)For the purposes of section 75(3)(b) of the Administration Act (recovery from such other person, as well as or instead of the person to whom the overpayment was made), where recovery of an overpayment is sought by a relevant authority –

    (a) the prescribed person from whom it is sought shall be –

    (i) in a case where an overpayment arose in consequence of a misrepresentation of or a failure to disclose a material fact (in either case, whether fraudulently or otherwise) by or on behalf of the claimant or any other person to whom housing benefit has been paid, the person who misrepresented or failed to disclose that material fact instead of, if different, the person to whom the payment was made;

    (ii) in a case where an overpayment arose in consequence of an official error where the claimant or a person acting on his behalf or any other person to whom the payment has been made could reasonably have been expected, at the time of receipt of the payment or of any notice relating to that payment, to realise that it was an overpayment, that person instead of, if different, the person to whom the payment was made; or

    (b) where sub-paragraphs (a)(i) and (ii) do not apply, the prescribed person from whom it is sought is –
    (i) the claimant;
    (ii) in a case where a recoverable overpayment is made to a claimant who has one or more partners, the claimant’s partner or any of his partners.”[/i:7ce8a2caf6]

    If you look at the commissioners decision CH/4234/2004:

    It would appear that the commissioners have said that the [i:7ce8a2caf6]shall[/i:7ce8a2caf6] bit of 101 only relates to recoverability and not the actual decision to recover so that both you and the claimant could be targets for recovery if you both fit into 101(2)(a)(i).

    From what you have said the claimant fits into 101(2)(a)(i) but there remains a question as to whether you do. Did you misrepresent or fail to report a material fact?

    This is useful CF/14643/96 courtesy of rightsnet:

    I’m not going to hazard a guess as to whether you failed to report a material fact but I think the CD above suggests that you might have done if you ought to have done something with the little knowledge you had.

    This is useful R(I) 2/88 courtesy of rightsnet;

    Firstly a material fact must be a fact, it is certainly the case that whilst he hadn’t actually started work, he had advised you of his intention to “start work soon” , and that in itself is a fact. He obviously knew that it might be important to you otherwise why would he ever tell you? Whether his future intention is a fact that is [i:7ce8a2caf6]material[/i:7ce8a2caf6] appears to be determined by whether the LA decision maker would have been interested and I think you ought to have known that they might be.

    From R(I) 2/88

    [i:7ce8a2caf6]In that case I had held in the court below that a fact is material only if it would—not might-have led a prudent insurer to decline the risk or charge a higher premium. My decision was unanimously reversed in the Court of Appeal. Lord Justice Kerr held that the word “influenced” means that the fact is one which would have had an impact on the formation of the prudent insurer’s opinion; in other words, it must be a fact which he would properly have taken into account. Lord Justice Stephenson put it this way at page 529 of the report:

    “I conclude . . . that everything is material to which a prudent insurer . . .would wish to direct his mind. ”

    Applying that approach, I would hold that the correct testis whether the medical board was in ignorance of a fact to which it would have wished to direct its mind. This is essentially the same as the test applied by the medical appeal tribunal, in the passage I have quoted, although not of course expressed in precisely the same language. So I would reject Mr. Ouseley’s argument that the medical appeal tribunal have erred in law by applying the wrong test. [/i:7ce8a2caf6]

    So if you ought to have thought or did think “this is something that the benefits authority might like to know about” but failed to pass it on then you might have failed to report a material fact.


    Julian – very good post indeed.

    I can see timbob’s point of view (a social landlord I presume). I presume the landlord thought they were doing the LA a favour by co-operating whereas the investigations team considered that the landlord had an OBLIGATION to assist with such enquiries. I am with the latter here and do not think the landlord can merely refuse; the Social Security (fraud) Act has some tough penalities although there clearly is an issue of goodwill. But what about the issues about who was the main cause of the overpayment? Depending on the dates, they would surely bite in such a situation?

    From A4/2006 (on this site)

    Regulation 6(3) to (5) amend Regulation 101 of the HB regulations, so that the chief consideration when deciding ‘whom to recover from’ should be who has misrepresented or failed to disclose information, and in a case of official error the person who could reasonably have been expected to realise that there had been an overpayment. This will mean that overpayments caused by a change to the claimant’s personal circumstances, which the landlord could not possibly know about, should be recovered from the claimant rather than from the landlord. If this legislative requirement to recover from the person who has misrepresented or failed to disclose information (or could reasonably have been expected to realise there was an overpayment) is not taken into account, the person from whom payment is wrongly sought will have a right of appeal to an appeal tribunal, on the basis that the LA has not applied the law correctly, in accordance with the Tribunal of Commissioners’ decision.

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