Catalyst Housing Limited (201807134)

 

 

 

 

REPORT

COMPLAINT 201807134

Catalyst Housing

13 January 2021

Our approach

The Housing Ombudsman’s approach to investigating and determining complaints is to decide what is fair in all the circumstances of the case. This is set out in the Housing Act 1996 and the Housing Ombudsman Scheme. The Ombudsman considers the evidence and looks to see if there has been any ‘maladministration’, for example whether the landlord has failed to keep to the law, followed proper procedure, followed good practice or behaved in a reasonable and competent manner.

Both the resident and the landlord have submitted information to the Ombudsman and this has been carefully considered. Their accounts of what has happened are summarised below. This report is not an exhaustive description of all the events that have occurred in relation to this case, but an outline of the key issues as a background to the investigation’s findings.

The complaint

1. The resident has complained about the administration of his rent account, specifically the handling of a housing benefit payment and the resulting rent arrears.

Background and summary of events

2. On 1 February 2018 the landlord wrote to the resident advising that he had been served with a notice seeking possession as his rent account was £4,208.85 in arrears. The landlord asked the resident to attend its office on 6 February to discuss the arrears and avoid legal action being taken. During the meeting on 6 February the resident queried why the arrears were so high and the landlord told the resident that a payment of £2000 had been paid back to the housing benefit department. The resident agreed to pay £21.66 towards the arrears each month.
3. The resident subsequently spoke to the landlord about the matter again on 1 June 2018. During the discussion the landlord told the resident that £2000 was accidentally transferred to his account in March 2017 and the mistake was identified in January 2018, after which the money was transferred to the correct account. The landlord apologised for the mistake and confirmed the resident could raise a formal complaint about the matter if he wished to.
4. On 18 July 2018 the resident wrote to the landlord raising a complaint. He said that the deduction of the housing benefit payment meant that his arrears had almost doubled overnight. He said that during the meeting with the landlord in February he was told that the local authority was at fault. However, after he raised this with the local authority, the landlord confirmed that it was responsible for the error and had paid another tenant’s housing benefit payment into his account. He said the landlord’s handling of the matter had caused him a significant amount of stress and sleepless nights and the cumulative effect on him and his family had been “devastating”.
5. The landlord responded to the complaint on 14 August 2018. It said that:

1. It understood how upsetting the situation must have been for the resident and apologised for the difficulties this had caused
2. The payment of £2,000 was incorrectly credited to the resident’s account in March 2017 and was due to an error in its rent processing team.
3. Whilst it sympathised regarding the delay in recognising the error, the arrears had not been caused by the error. The arrears had been caused by not enough payments being made to the account on a monthly basis (either by the resident or housing benefit) to cover the rent charge.
4. It would assist in making a further discretionary housing benefit application to help reduce the arrears.

6. The Ombudsman subsequently made enquiries with the landlord about the complaint in early 2019 following contact from the resident. The Ombudsman asked the landlord to contact the resident with an update on his complaint as it was unclear what stage the complaint had reached. During May 2019 the landlord told the Ombudsman that the matter had been dealt with informally and it had now logged the matter as a formal complaint.
7. The landlord provided a stage two response on 22 May 2019. It said that:

1. It had wrongly transferred the housing benefit payment of £2,000 into the resident’s account and was sorry for the distress caused by this mistake.
2. The matter had been raised with relevant staff members to ensure this did not happen again.
3. The arrears on the account were caused by a shortfall of the resident’s housing benefit which he was responsible for paying.
4. Its staff had actively worked with the resident to claim a discretionary housing benefit payment as well as refer him to its financial inclusion team to support him.
5. It would like to offer the resident a goodwill gesture of £100 in light of any distress caused.

8. The resident says that he hand-delivered a letter to the landlord on 30 May 2019. In this letter the resident explained why he was dissatisfied with the landlord’s response to his complaint, including that:

1. The landlord had illegally and incorrectly paid £2,000 into his rent account. The funds belonged to another tenant and he wanted to know more about what had happened and how this person was treated.
2. The landlord initially claimed the local authority was responsible for the error. However, he had established that the landlord was responsible for the error after making his own enquiries with the local authority.
3. The landlord had failed to apologise, empathise and put the situation right.
4. The successful discretionary housing benefit payment was nothing to do with the landlord as it was to cover his arrears and not the landlord’s financial indiscretion, although he was grateful for the assistance the landlord’s officers had provided in this regard.
5. He did not agree that the deduction of the £2,000 left his account in the same position it would have been in had the landlord’s error not been made. The crediting of £2,000 to his rent account had a bearing on how he budgeted for rent and other necessities.
6. The landlord had contributed to the arrears on the account through its mistake and during April 2019 it started court proceedings. It failed to include all the relevant information in the court documents including how it had contributed towards the arrears. It had asked the court to grant possession as it was a social housing landlord and needed to rent the property to someone else.
7. Despite a payment of £4,000 being credited to the account, there was still a possession order in place.

9. During February 2020 the resident advised the Ombudsman that he had received no response to his complaint dated 30 May 2019. The Ombudsman made enquiries with the landlord who confirmed that it had no record of receiving the resident’s letter and would now escalate the complaint.
10. On 21 April 2020 the landlord told the Ombudsman that it had started the review but some concerns had been raised in relation to the handling of the complaint and it wanted to ensure all departments had been contacted with a learning plan before finalising the review. It said it was aiming to send the review out by the end of the week.
11. On 22 May 2020 the landlord wrote to the resident with its review response. It said that:

1. It was disappointing that it had failed to properly notify the resident of the misplaced funds or subsequent removal of the funds from the account. This level of service was not one it would want for its customers.
2. It had approached its income and finance teams with the learning from the complaint in order to improve communication between both teams to ensure customers are notified in a timely manner.
3. It agreed with the income team’s position that the arrears accrued as a direct result of shortfalls in payments made by the resident and housing benefit. It would not write off the arrears but would like to offer its maximum goodwill gesture of £150 for the inconvenience caused by its handling of the complaints.
4. It would continue to support the resident in relation to any financial issues he may be facing and its income officer would remain his point of contact and work with him to set up a fair payment plan.
5. The complaint had exhausted its complaints procedure and the resident could refer his complaint to the Ombudsman if he remained dissatisfied with its response.

Assessment and findings

12. It is of concern that the landlord transferred a housing benefit payment for another tenant to the resident’s account and that this was not identified for 10 months. This raises concerns about the landlord’s processes for monitoring rent accounts and housing benefit payments, particularly given the amount of the payment and length of time the mis-posting of the payment went unnoticed.
13. When the error was identified the landlord transferred the housing benefit payment to the correct account and subsequently wrote to the resident about the matter. However, it is of concern that the landlord’s first communication with the resident about the matter included a notice seeking possession and that no explanation was offered in the accompanying letter as to why the rent arrears had increased by so much. It is understandable that the landlord’s correspondence would have caused the resident considerable distress.
14. The available evidence also indicates that the landlord did not provide an accurate explanation during the subsequent meeting with the resident as to why the arrears had increased by so much. This is because it told the resident that the payment of £2,000 was a housing benefit overpayment (ie that the local authority was seeking a return of benefit it had paid in relation to the resident’s claim), not that it had credited another tenant’s housing benefit to the resident’s account in error. This led to the resident making his own enquiries with the local authority and establishing that it was the landlord that was responsible for the error.
15. The rent statement shows that prior to the landlord debiting £2,000 from the resident’s account in January 2018, significant arrears had accrued as the resident was not paying enough towards his rent to make up the shortfall in his housing benefit payments. Therefore, it was appropriate for the landlord to highlight this in its complaint responses. Whilst the arrears had increased further due to the debiting of £2,000 in January 2018, ultimately the resident was responsible for the arrears as he was responsible for paying his rent and making up any shortfalls in his housing benefit entitlement. It is also acknowledged that the landlord subsequently assisted the resident in making a discretionary housing benefit application and this has helped to reduce the arrears significantly.
16. However, the crediting of the housing benefit payment to the resident’s rent account in March 2017 and the failure to rectify this error for 10 months would have provided a misleading impression of the account and the extent of the resident’s rent arrears. This may have influenced how the resident budgeted for living expenses. Had the error not been made then the resident would have been aware at a much earlier stage that there were significant arrears on the account which he needed to start making payments towards.
17. In its complaint responses the landlord acknowledged that it was at fault for crediting the housing benefit payment to the resident’s account and for the delay in identifying this. It has apologised and offered compensation for the inconvenience caused. However, the complaint responses failed to consider in enough detail the extent of the landlord’s shortcomings, including its unnecessarily heavy-handed and misleading communication with the resident in the initial stages. The compensation offer was inadequate considering the distress and inconvenience caused to the resident as a result.
18. Whilst the landlord indicated that there had been learning from the complaint and it had improved its processes as a result, it could have explained the changes that had been made in more detail. This might have helped reassure the resident that the matter had been taken seriously and the same mistakes would not happen again.
19. It is noted that the resident says he hand-delivered his complaint letter of 30 May 2019 to the landlord but did not receive a response. The landlord says it has no record of receiving the letter at this time. As no evidence has been provided to confirm that the landlord received the letter, it is not possible to verify the resident’s version of events and the Ombudsman is unable to make a finding on this matter.
20. In his complaint the resident has raised concerns about information submitted by the landlord as part of court proceedings. The Ombudsman is unable to make a finding on this issue as it relates to court proceedings and any concerns would need to be raised as part of those proceedings. It is also noted that the resident asked the landlord for details about the tenant whose housing benefit payment was credited to his account. It was not appropriate for the landlord to divulge any details about the other tenant due to confidentiality requirements however it may have assisted matters if the landlord had clarified this in its complaint responses.

Determination (decision)

21.In accordance with paragraph 54 of the Housing Ombudsman Scheme there was service failure by the landlord in relation to its handling of the resident’s rent account.             

Reasons

22.It is acknowledged that the landlord has upheld the complaint and offered compensation to the resident. However, the complaint responses failed to consider in enough detail the extent of the landlord’s shortcomings, including its unnecessarily heavy-handed and misleading communication with the resident in the initial stages. The compensation offer was inadequate considering the distress and inconvenience caused to the resident as a result.

Orders and recommendations

23. The landlord is ordered to do the following within six weeks of the date of this report:

 

a.     Apologise to the resident in writing for the service failures identified by this investigation

 

b.     Pay the resident £400 compensation for the distress and inconvenience caused by the handling of the resident’s rent account. This is to include the amount of £150 already offered

 

c.      Review the action it has taken in response to the complaint to ensure that the same issues do not arise again and confirm in writing to both the resident and the Ombudsman the specific action it has taken in this regard