Pension Credit Overpayment and recovery

A very interesting case has come our way in relation to a pension credit overpayment and its recovery. While assisting with this individuals benefits, a colleague who’s role is debt advice and money related matters felt we could conduct a bankruptcy to reduce this elderly persons outgoings. This sums were queried with DWP who confirmed amounts and no action was being taken, thus overpayment were added to the bankruptcy.

However without labouring the point it seems the DWP are now stating they treated this case as a fraud and as such the sum outstanding can not be added into any debt resolution. Having regard to the fact there was no charge, no Prosecution, no Civil Penalty nor an administration penalty, or even a caution I am at a genuine loss to accept this contention from them.

Not withstanding the fact an element of intent has to be proven in a fraud accusation, I can’t recall when the powers of the DWP allowed them not only to breach Article 6 HRA but also become their own Judge , Jury and executioner.

We are fully aware of the policy manual in relation to these matters, but it is not identifiable what gives the DWP this totalitarian approach.  In theory this approach would mean that all they have to do is say the magic fraud words and all money can be recovered.

Any words of wisdom would be accepted

I’d be interested in any other views on this, as it has occasionally been a factor we’ve considered when advising on future insolvency, but I’ve never got to grips with it in practice.

Anyway, here’s my thoughts. As you may know, the OR’s manual has some relevant guidance. As I understand it,  the conditions for common law fraud may be met, even without any formal caution/conviction, etc. A transcript of any IUC may be useful to obtain.
https://www.insolvencydirect.bis.gov.uk/technicalmanual/Ch37-48/chapter40/part8/part8.htm

The courts are sometimes called upon to decide whether s281(3) of the Insolvency Act should apply, e.g. in money claims for debts that were listed in bankruptcy. So I think it is ultimately up to a court, not the DWP as creditor, to decide whether a debt was incurred through fraud and so should be payable post-discharge.
E.g. see Woodland Ferrari v UCL Group Retirement Benefits Scheme, where a Pensions Ombudsman’s determination of fraud was a relevant factor to the court’s decision, but doesn’t seem to be binding.

Where a creditor, such as DWP, may not need a court order to enforce recovery, e.g. if they have the option of direct deductions from ongoing benefit, then I am not sure what remedy the bankrupt is best pursuing. As a first step, the relevant Official Receiver or trustee should act on a complaint that a creditor is pursuing a debt that was included in bankruptcy.

NB, in any event, debts that are thought to be fraudulent should not be recoverable until the bankrupt is discharged.

A further point. I think this issue can soon stray into debt advice, and so should really be taken up by someone regulated by the FCA.