A Benefit Recipient’s First Right of Appropriation

The Social Security Administration Act 1992 S187

187 Certain benefit to be inalienable (1) Subject to the provisions of this

Act, every assignment of or charge on—
(a) benefit as defined in section 122 of the Contributions and Benefits Act; (b) any income-related benefit; or
(c) child benefit,

and every agreement to assign or charge such benefit shall be void; and, on the bankruptcy of a beneficiary, such benefit shall not pass to any trustee or other person acting on behalf of his creditors.”

The Act provides that certain benefits are ‘inalienable’, jsa, esa, pip,dla hb etc. It certainly protects the interest of those receiving benefits by ensuring that the money received cannot be ‘assigned’ or appropriated by the creditor nor the subject of any charge. This means that benefits must be put to their intended use: to provide the means by which recipients may live. However, there is a disparity between the ideals of the Act- the protection of benefits payments- and the reality that those receiving benefits face with regards to a right of set-off. When the Act was drafted in 1992, benefits were not received via a bank account; many recipients did not even have a bank account. It is understandable that the Act does not provide for the situation us now face- the bank’s indiscriminate use of right of set-off. Furthermore, the common law first right of appropriation requires that the bank be instructed in writing as to the use benefits must be applied to. The Banking Codes , stress the requirement of instruction. The Act seems unconcerned by the matter of instruction; benefits
payments which credit an account must not be appropriated by virtue of them being benefits described under s. 187. The requirement for instruction under the common law right means that a recipient who fails to notify the bank of their intention - that the benefits be put towards sustaining oneself- means that the recipient is effectively assigning their benefits to the bank, for the bank to do with as it pleases. This is certainly not within the spirit of the Act.

The first right of appropriation must become something other than a right which requires exercising before it comes into action. The legislation must come closer to that of the Social Security and Administration Act 1992 and indicate that benefits payments crediting an account cannot, as an automatic right belonging to the recipient, be subject to a bank’s second right of appropriation.

Templates can be found at

http://moneyaware.co.uk/template-letters-court-forms/template-letters/

http://www.consumerwiki.co.uk/index.php/RIGHT_OF_APPROPRIATION

This is probably all well-known here, but for the record:

As the law stands, exercising the right of first appropriation for each and every benefit payment is not really practical in most circs. And I can’t see the law changing any time soon, given the government’s current strong emphasis on taking personal responsibility, etc.

Claimants who find their benefit money going straight out on overdraft charges or whatever, should be strongly encouraged to re-bank to a clean bank (or Post Office) account. And perhaps be referred for debt advice.

List of ‘basic’ bank accounts in this MAS leaflet. Clients should be reminded that even basic accounts have stringent ID requirements these days.