Lambeth Council (202121192)

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REPORT

COMPLAINT 202121192

Lambeth Council

20 May  2022


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 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 complaint is about the landlord’s handling of a refund into the resident’s rent account.

Background

  1. The resident is a tenant of the landlord. As part of her weekly rent, she paid a water charge.
  2. After the resident fell into rent arrears, she set up a repayment plan with the landlord in 2012. In 2017 a debt agency took control of the arrears and made regular payments to the landlord until 2019. In July 2019 the agency advised the resident that the debt was cleared.
  3. The resident raised a complaint in July 2021 as the landlord had credited a refund for a water charge overpayment into her old rent account (the one which had fallen into arrears). The landlord explained that at that time the final payments from the debt agency had been held in a suspense account, and so the old account remained in debt and had never actually been settled. As such the water charge overpayment had been used against this debit. The landlord then received the payments from the collection agency. The landlord apologised for the confusion, reassured her she had not suffered a direct financial loss, and offered £50 for her time and trouble pursuing the matter.
  4. In the resident’s complaint to this Service, she asked us to investigate the landlord’s administration of her former rent account, and the financial loss from the overcharged water payment. She also raised concerns about the landlord’s complaint handling.

Assessment and findings

Scope of investigation

  1. As explained above, the resident asked this Service to investigate the landlord’s administration of her former rent account. However, in accordance with paragraph 39 (e) of the Housing Ombudsman Scheme we cannot look at this aspect. This is because the resident’s complaint to the landlord about this concern in July 2021 was not brought as a formal complaint within a reasonable period of time which would normally be within six months of the matters arising.
  2. The resident has also requested that we investigate her financial loss from being overcharged by the landlord for the water charge element of her rent. However, in accordance with paragraph 39 (i) of the Housing Ombudsman Scheme, we are unable to look at this matter. This is because we cannot investigate complaints which concern the level of or the amount of increase to rent or service charges, or their reasonableness. Complaints that relate these issues are within the jurisdiction of the First-Tier Tribunal (Property Chamber). The Tribunal has the specialised remit, experience, and legal powers to better resolve such disputes.
  3. Also, the concern about how the landlord handled the resident’s request to receive the rent refund it awarded her would be better dealt with by the First-Tier Tribunal or the courts, and not by this Service. This is because the matter concerns the consequences of the above water charge overpayments and administration. The First-Tier Tribunal and the courts have the power to adjust rent accounts, unlike this Service. This is why this aspect of the resident’s complaint will not form part of our investigation.
  4. To clarify, this investigation will focus on the landlord’s application of the rent refund to the resident’s current rent account rather than paying her directly, as well as the landlord’s communication and complaint handling.

Handling of the refund

  1. The landlord’s website sets out that the water charge refund is automatically applied to the resident’s rent account. If the adjustment leaves the account in credit, the resident can apply for a refund. It will only offer a refund if the resident has no outstanding debts. It will not process refund requests against accounts in arrears. Any outstanding arrears on a former rent account will be deducted from any refund due. The landlord’s website also explains that if a rent account is significantly in credit, residents can ask for a refund. Before it issues a refund, the landlord will ensure that the resident does not have any outstanding debt. It will then pay the money into the resident’s bank account.
  2. The landlord’s complaints policy says it will issue its stage one complaint response within 20 working days. Its compensation policy sets out that it can offer residents compensation for their time and trouble pursuing a complaint. The policy does not specify how much it can offer in these circumstances.
  3. The Ombudsman’s Remedies Guidance (published on our website) sets out the Ombudsman’s approach to compensation. The Remedies Guidance suggests awards between £50 and £250 for cases where there has been service failure which had an impact on the complainant but was of short duration and may not have significantly affected the overall outcome for the complainant. Examples include failure to meet service standards for actions and responses (such as delays in responding to a complaint) but where the failure had no significant impact on the outcome of the complaint.
  4. In her complaint to this Service the resident commented on the landlord’s complaint handling. She said it had not initially accepted her complaint as it said it was a duplicate, and that she had to chase it to accept her complaint. No evidence has been provided for this investigation to show the resident chasing the landlord for a response to her complaint. Nevertheless, in its stage two complaint response, the landlord offered the resident £50 compensation for her time and trouble chasing the matter.
  5. Although the landlord recognised the resident’s frustration, and offered compensation, it did not explain what exactly had happened in terms of its initial complaint handling. The evidence shows the resident submitted her complaint in July 2021, and the landlord issued its stage one response in September 2021 (two months later). It exceeded its target response timeframe, and failed to explain why there had been a delay. As such, although it was reasonable to offer compensation, the amount was disproportionate to the actual level of inconvenience experienced by the resident as whilst the delay was not significant, it was still noticeable especially when considering there was no explanation for why it had happened.
  6. The resident raised a complaint as she was dissatisfied the landlord had deposited the water refund into her old rent account, and not directly to her. The landlord explained that her old account was still technically in arrears at the time of the refund, as it had not transferred the final payments over in 2019 because they were held in a suspense account. Therefore, it deposited the refund into this account to offset the arrears. It said it realised what had happened, and then transferred the refund to her current rent account. The landlord provided a clear explanation as to what had happened.
  7. The landlord’s actions were in accordance with its website as it automatically issued the refund into the resident’s rent account, and not to her bank account as she did have an outstanding debt (although she was unaware, and it was an error). Once the landlord corrected the error, it transferred the refund to her current account which left her in credit. It is unclear why, at this point, it did not refund the overpayment to her directly, rather than leaving her in credit. Its website explains that it can issue rent refunds when a resident is in significant credit.
  8. The landlord should have explained to the resident why it would not refund her directly, or who she could refer her request to. If her credit was not significant enough to warrant a refund, this should have been clearly explained to her. It was unreasonable for the landlord not to fully explain all of its actions, or why it could not refund her directly as this was the basis of her stage one complaint. This was a failing in terms of its communication with the resident.
  9. Overall, the landlord’s offer of compensation for the resident’s time and trouble pursuing the matter was insufficient when considering: the delay with its stage one complaint response; that the error with the old account’s debit was only identified because of the resident’s time and trouble; the lack of explanation for the stage 1 delay; and the failure to clearly communicate why it would not offer her a direct refund.

Determination

  1. In accordance with paragraph 54 of the Housing Ombudsman Scheme, there was service failure in respect of the complaint.

Orders and recommendations

  1. The landlord is ordered to, within 4 weeks:
    1. Pay the resident £100 for the inconvenience caused as a result of the failings identified in this report. This is in addition to the £50 already offered.
    2. Respond to the resident’s request to be directly refunded, and provide a full and clear explanation for any decisions made.