Joint accounts and the CMS – What were the DWP told in answer to their consultation?
We wrote recently about the DWP response to their 2016 Consultation on removing money from Joint Accounts. We have obtained the detail around the responses on behalf of organisations and those of individuals. We reproduce them here and would ask the open question
“Why did the DWP not consult on whether they should be taking money from Joint Accounts”?
Their consultation focused on the “how” (i.e. the mechanism by which they would do it) rather than whether raids on Joint Accounts were a sensible idea in the first instance.
So, here is what the DWP was told in response to their consultation (personal identifying information has been redacted).
We will leave you to read the full text but we’ve selected some quotes from the various submissions to give you the flavour of what was submitted.
British Bankers Association
BBA is supportive of measures to ensure that children are protected and properly supported by their parents, including the proposal to open up joint accounts to possible deduction orders outlined in the Consultation Paper (CP)
So they “welcome” the proposals.
Banks can provide bank statements to enable officials to make a decision about the ownership of funds by the various account holders, but are not well placed to be directly involved in such subjective decision-making themselves. The Child Maintenance Service (CMS) needs to make this decision itself, on the basis of bank statements and any representations from the account holders, and then impose a clear deduction order on the bank.
This is a big red flag. The banks don’t want to be involved in subjective decision making about source of funds but is anyone under any illusions that the CMS would be able to do a better job?
By their nature, joint accounts have multiple account holders. Without effective communications, the third party account holder is likely to experience confusion and distress when funds are frozen and/or deducted. It is therefore vital that the CMS make contact with the third party account holder in order to ensure transparency and prevent misunderstandings, and to provide a suitable opportunity to give representations.
Another big red flag around the joint account holder and impact on them…
It has long been a goal of the organisation to achieve an effective child maintenance system in this country, to reduce the financial disadvantage faced by children growing up in households dependent on a sole parent’s income, where that income is often restricted due to caring responsibilities.
They don’t define what they mean by “effective”….
Gingerbread therefore welcomes the proposal to extend the use of Deduction Orders to joint accounts, which is long overdue.
They seem to like Deduction Orders….
Deduction Orders are a crucial – and, in our view, underused – instrument in the enforcement toolbox available to child maintenance debt collectors
They REALLY LIKE Deduction Orders…
It is therefore important that there are sufficient high calibre dedicated child maintenance staff who have the requisite financial expertise to conduct financial investigations; identify deposit takers; scrutinise balances held in accounts to determine the funds attributable to the nonresident parent; and to properly consider representations from account holders.
This just appears to be wishful thinking in the extreme.
Given that Deduction Orders are an administrative method of enforcement, and therefore potentially speedier and cheaper than going to court for first a liability order and then bailiff action, the present preconditions before a Deduction Order will be considered seem unduly time-consuming and restrictive.
We would not want due process to get in the way would we Gingerbread?
Sadly, too often in the past, efforts to enforce payment of child maintenance debts have foundered due to difficulties in proving the accuracy of the debt.
This is one thing we would agree with…
Money Advice Trust
We do not generally favour the use of Regular Deduction Orders (RDO) or Lump sum Deduction Orders (LSDO) against joint accounts. We recognise this is a trend in the collection of various government debts. However, we believe such orders may give rise to bank charges, lapsed direct debits, unpaid bills, and hardship for the nonresident parent and the joint account holder who may be anew partner with children.
We think this is a very sensible thing to say.
We believe such orders are likely to lead to unfair results affecting innocent third parties such as the joint account holder and their household, dependent children and so on. We see no justification for the assumption that 50% of the funds in a joint account belong to the non-resident parent.
We would generally welcome any moves to make child maintenance debt collection more effective in relation to enforcing sums assessed as due from maintenance evaders.
So the lawyers are keen to see joint accounts raided. Yet:
We would also ask that the DWP give further consideration to where this power is likely to arise. We suggest that there is a difference between the very old (particularly CS1) caseload and the more recent ones (post 2003 CS2 or CS3). There seems to us to be less risk of unfairness in the taking of a robust approach in relation to the more recent caseloads. In our members’ experience, there are a considerable number of highly alienated NRPs under CS1.
We’re not sure what they mean by “highly alienated” but it may be a reference to parental alienation.
Legitimate concerns of the NRP will remain in the deduction against joint account intervention where, for example:
i. There are ongoing disputes as to liability (and this would impact upon the sums seized)
ii. The sums are not beneficially their own
iii. The sums are already committed for a project (for example, monies required to complete a property purchase, where contracts are already exchanged) where seizure may lead to significant losses.
More subjective decision making for the CMS…
Of the 19 individual responses, 18 were against the deductions from Joint Accounts with only 1 being supportive of the measure.
The proposed legislation in my view is unfair as it does not treat the partner of a NRP fairly and does not respect the right to privacy of that person.
Do what you like . You ruin lives full stop. You will be shut down eventually like csa was. (Editor note: That was the entire email submission)
I would like to think that common sense prevails and that money equals contact with children as the courts are rammed with people paying and not seeing their children and being let down by the courts, social services and cafcass.
I totally disagree with the suggestion it’s a disgrace. It’s invasion of privacy of an unconnected party
This will end in more relationship breakdowns.
Perhaps the government could better invest their time in consultations regarding shared parenting thereby removing the need for the CSA and child maintenance, and creating a better quality of life for the children of these relationship
What’s wrong with 50/50 custody with NO payment to either parent. Just another way to “tax” people to keep them poor. What happens when you make huge mistakes, like my case, where you empties my bank account forcing me to lay off my staff and close my business when you got my assessment wrong by your case workers incompetence
We’re sure that by now you get the idea. But the DWP aided by the likes of Gingerbread and the Legal Profession seem intent on finding ways to make a bad situation worse….
Also published on Medium.