Public Authorities (Fraud, Error and Recovery) Bill

The Schedule to be inserted into the Social Security Administration Act
1992 after Schedule 3A is—

“Schedule 3B

Section 121DB

Eligibility verification

Part 1 Power to require information

Power to require information by way of an eligibility verification notice

1

(1)

The Secretary of State may, for the purposes of identifying, or
assisting in identifying, incorrect payments of a relevant benefit, give a person of a type mentioned in paragraph 2 a notice (an “eligibility verification notice”) requiring the person to take the following steps.

(2)

The first step is to identify relevant accounts (see paragraph 20 (1) ) which—

(a)

the person provides, and

(b)

are accounts—

(i)

into which a specified relevant benefit has been
paid, or are accounts linked to such accounts, and

(ii)

which meet specified criteria (“eligibility
indicators”) whether alone or with other accounts within paragraph (a) and sub-paragraph (i) of this paragraph.

(3)

The second step is to give to the Secretary of State the following
information for each identified account—

(a)

specified details about the account (for example, sort code
and account number),

(b)

specified details about the account holders (for example,
their names and dates of birth), and

(c)

specified details about how the account meets the
eligibility indicators.

(4)

Information that amounts to transaction information or special
category data—

(a)

may not be required by the Secretary of State by way of
an eligibility verification notice, and

(b)

must not be given to the Secretary of State in response to
such a notice.

(5)

But the prohibition against the requiring and giving of special
category data does not prohibit the requiring and giving of data to establish that an individual is in receipt of the specified relevant benefit.

(6)

A person given an eligibility verification notice is not required
to carry out the steps set out in sub-paragraphs (2) and (3) in relation to any account that is held outside the United Kingdom.

(7)

In this paragraph the reference to an account which is linked to
an account into which a specified relevant benefit is paid is to an account held by the same person who holds the account into which that benefit is paid.

(8)

In this Schedule, references to an incorrect payment of a benefit—

(a)

are references to a payment of an amount in respect of
that benefit which is not equal to the amount for which the benefit recipient is eligible, and

(b)

include references to payments that have been made or
that may be made.

Types of person to whom an eligibility verification notice can be given

2

(1)

The types of persons referred to in paragraph 1 (1) are persons—

(a)

to whom sub-paragraph (2) applies, or

(b)

who are described in regulations.

(2)

This sub-paragraph applies to persons who—

(a)

are authorised—

(i)

to accept deposits, or

(ii)

to issue electronic money, and

(b)

in the course of that activity, provide relevant accounts
into which a relevant benefit may be paid.

(3)

Regulations under sub-paragraph (1) (b) may describe only types
of person who provide accounts which are, or correspond to, relevant accounts (including accounts that operate by reference to cryptoassets or any similar asset).

(4)

In sub-paragraph (3) , “cryptoasset” has the meaning given in
section 84A of the Proceeds of Crime Act 2002.

(5)

For the purposes of sub-paragraph (2) (a) (i) —

(a)

the reference to accepting deposits is to carrying on the
regulated activity of accepting deposits for the purposes of the Financial Services and Markets Act 2000 (see section 22 of that Act and article 5 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544)), and

(b)

a person is authorised to accept deposits if they are an
authorised person or an exempt person in relation to the carrying on of that activity for the purposes of the Financial Services and Markets Act 2000.

(6)

For the purposes of sub-paragraph (2) (a) (ii) , a person is authorised
to issue electronic money if the person—

(a)

is an electronic money institution, and

(b)

the person is authorised or registered under Part 2 of the
Electronic Money Regulations 2011 (S.I. 2011/99) in relation to carrying on the activity of issuing electronic money.

(7)

In this paragraph, “electronic money” and “electronic money
institution” have the meanings given by regulation 2(1) of those Regulations (and references to the issue of electronic money are to be construed in accordance with those Regulations).

Eligibility indicators

3

(1)

The eligibility indicators in an eligibility verification notice must
be criteria which indicate that the specified relevant benefit may have been, or may be, incorrectly paid.

(2)

The eligibility indicators may be criteria to be met by a single
account or by two or more accounts combined.

(3)

The eligibility indicators must not include personal data.

Further provision about eligibility verification notices

4

(1)

An eligibility verification notice must specify a period within
which the person given the notice must comply with the notice to avoid liability to a penalty under Part 2 of this Schedule.

(2)

The period specified—

(a)

must begin with the day on which the notice is given, and

(b)

must not be less than 14 days.

(3)

An eligibility verification notice must give details about—

(a)

the right to seek a review of the notice under paragraph 13 ,

(b)

the right to appeal against the notice under paragraph 14 , and

(c)

the penalties that may be imposed under Part 2 of this
Schedule.

(4)

An eligibility verification notice (a “periodic eligibility verification
notice”) may require a person to take the steps set out in paragraph 1 (2) and (3) at specified intervals within a period not exceeding one year from the date of the notice.

(5)

If it does so, the eligibility verification notice must set out the
periods within which the person must comply with the eligibility verification notice for each specified interval.

(6)

Each such period must not be less than 14 days.

(7)

An eligibility verification notice may not require a person to
examine historic data, except for the purpose set out in sub-paragraph (9) .

(8)

Data is historic, in relation to an eligibility verification notice, if
it relates to a time before the beginning of the period of one year ending with the day on which the notice is given.

(9)

An eligibility verification notice may require a person to provide
the date that an account which meets an eligibility indicator first began to meet that indicator.

(10)

An eligibility verification notice may require information—

(a)

to be compiled or collated in a specified manner;

(b)

to be provided in a specified way (including by electronic
transmission to a specified address or portal).

(11)

The Secretary of State may vary or revoke an eligibility verification
notice by giving notice to the person to whom it was given.

Use of information obtained

5

Information given to the Secretary of State in response to an
eligibility verification notice (“EVM information”) may be used—

(a)

to identify, or assist in identifying, incorrect payments of
any benefit, or

(b)

in criminal or civil proceedings relating to such payments,

but not for any other purpose.

Restrictions on processing and data protection

6

(1)

This Schedule does not require or authorise any processing of
information that—

(a)

contravenes the data protection legislation;

(b)

is prohibited by any of Parts 1 to 7 or Chapter 1 of Part
9 of the Investigatory Powers Act 2016.

(2)

But the powers conferred, and the requirements imposed, by the
Schedule are to be taken into account in determining whether the processing of information would contravene the data protection legislation.

(3)

Any processing of information carried out in accordance with
this Schedule (as read subject to sub-paragraph (1) ) does not breach—

(a)

any obligation of confidence owed by the person
processing the information, or

(b)

any other restriction on the processing of information
(however imposed).

Part 2 Penalties

Fixed penalty for failure to comply with an eligibility verification notice

7

(1)

If the Secretary of State considers that a person given an eligibility
verification notice—

(a)

has failed to comply with the notice within the period
specified, and

(b)

has no reasonable excuse for the failure,

the Secretary of State may impose a penalty (a “fixed penalty”) on the person.

(2)

But the Secretary of State may not impose a fixed penalty before—

(a)

giving the person an opportunity to make representations
about their compliance, and

(b)

if the person has sought a review of the notice under paragraph 13 , the conclusion of that review.

(3)

The Secretary of State imposes a fixed penalty by giving the
person a notice of the penalty (a “fixed penalty notice”).

(4)

A fixed penalty notice must state—

(a)

the reason for the penalty,

(b)

the amount of the penalty, and

(c)

the period within which it must be paid.

(5)

A fixed penalty may not exceed £1,000.

(6)

The Secretary of State may vary or revoke a fixed penalty notice
by giving notice to the person to whom it was given.

(7)

The Secretary of State may not impose more than one fixed
penalty in respect of an eligibility verification notice except a periodic eligibility verification notice.

(8)

In the case of a periodic eligibility verification notice, the Secretary
of State may not impose more than one fixed penalty in respect of each specified interval.

Daily rate penalty for continuing failure to comply

8

(1)

The Secretary of State may impose a penalty (a “daily rate
penalty”) on a person if—

(a)

a fixed penalty has been imposed on the person in relation
to a failure to comply with an eligibility verification notice, and

(b)

the Secretary of State considers that the person’s failure
to comply without reasonable excuse is continuing.

(2)

The Secretary of State imposes a daily rate penalty by giving the
person a notice of the penalty (a “daily rate penalty notice”).

(3)

A daily rate penalty notice must state—

(a)

the reason for the penalty,

(b)

the daily rate of the penalty, and

(c)

that the penalty will be payable in relation to each day
by the end of which the person has failed to comply with the eligibility verification notice or such earlier date as may be specified or described in the notice.

(4)

The daily rate of a daily rate penalty may not exceed £40.

(5)

The Secretary of State may vary or revoke a daily rate penalty
notice by giving notice to the person to whom it was given.

(6)

The Secretary of State may not impose more than one daily rate
penalty in respect of an eligibility verification notice except a periodic eligibility verification notice.

(7)

In the case of a periodic eligibility verification notice, the Secretary
of State may not impose more than one fixed penalty in respect of each specified interval.

Increased daily rate penalties

9

(1)

This paragraph applies if—

(a)

a daily rate penalty is imposed on a person,

(b)

the failure to which the penalty relates continues for more
than 30 days beginning with the first day on which the daily rate penalty is payable, and

(c)

the person has been notified that the Secretary of State
may apply for an increased daily rate penalty to be payable.

(2)

The Secretary of State may make an application to the Tribunal
for an increased daily rate penalty to be payable by the person.

(3)

If the Tribunal determines that an increased daily rate penalty
must be paid, it must determine—

(a)

the increased daily rate, and

(b)

the date from which the increased rate begins to be
payable.

(4)

In deciding the increased daily rate, the Tribunal, must, in
particular, have regard to—

(a)

the likely cost to the person of complying with the
eligibility verification notice,

(b)

any benefits to the person in not complying with it, and

(c)

any benefits to anyone else resulting from the person’s
non-compliance.

(5)

The Tribunal may not determine a daily rate that exceeds £1,000.

(6)

The Secretary of State must notify the person of the Tribunal’s
determination.

Penalties for inaccurate or prohibited information

10

(1)

The Secretary of State may impose a penalty (an “inaccurate
information penalty”) on a person under this paragraph if the Secretary of State considers that—

(a)

in complying with an eligibility verification notice, the
person has given the Secretary of State inaccurate information, and

(b)

condition A, B or C is met.

(2)

Condition A is that the inaccuracy was—

(a)

deliberate, or

(b)

due to a failure, without reasonable excuse, by the person
to take reasonable care.

(3)

Condition B is that the person—

(a)

knew of the inaccuracy at the time of giving the
information,

(b)

failed to inform the Secretary of State at that time, and

(c)

has no reasonable excuse for the failure.

(4)

Condition C is that the person—

(a)

discovered the inaccuracy some time later, and

(b)

failed to take reasonable steps to inform the Secretary of
State, and

(c)

has no reasonable excuse for the failure.

(5)

The Secretary of State may impose a penalty (a “prohibited
information penalty”) under this paragraph if the person, without reasonable excuse, gives the Secretary of State information in contravention of paragraph 1 (4) (transaction information or special category data).

(6)

But the Secretary of State may not impose a penalty under this
paragraph before giving the person an opportunity to make representations about—

(a)

in the case of an inaccurate information penalty, whether
or not—

(i)

the information is inaccurate;

(ii)

condition A, B or C is met;

(b)

in the case of a prohibited information penalty, whether
or not the person has given information in contravention of paragraph 1 (4) without any reasonable excuse.

(7)

The Secretary of State imposes a penalty under this paragraph
by giving a notice (an “information penalty notice”).

(8)

An information penalty notice must state—

(a)

the reason for the penalty,

(b)

the amount of the penalty, and

(c)

the period within which it must be paid.

(9)

A penalty under this paragraph may not exceed £3,000.

(10)

The Secretary of State may vary or revoke an information penalty
notice by giving notice to the person to whom it was given.

Recovery of penalties

11

(1)

In England and Wales, a penalty imposed under this Part of this
Schedule is recoverable—

(a)

if the county court so orders, as if it were payable under
an order of that court;

(b)

if the High Court so orders, as if it were payable under
an order of that court.

(2)

In Scotland, a penalty imposed under this Part of this Schedule
may be enforced in the same manner as an extract registered decree arbitral bearing a warrant for execution issued by the sheriff court of any sheriffdom in Scotland.

Power to change maximum amount of penalties

12

Regulations may amend the amount for the time being specified
in paragraph 7 (5) , 8 (4) , 9 (5) or 10 (9) to reflect a change in the value of money.

Part 3 Reviews

13

(1)

A person to whom an eligibility verification notice is given may
apply to the Secretary of State for a review of the decision to give the notice.

(2)

An application under sub-paragraph (1) must be made within
the period of 7 days beginning with the day on which the notice is given.

(3)

On a review, the Secretary of State may—

(a)

revoke the notice,

(b)

uphold the notice, or

(c)

vary the notice.

(4)

After a review has been carried out, the Secretary of State must—

(a)

notify the person who applied for the review of the
outcome of the review, and

(b)

if the outcome was to vary the notice, give the person the
varied notice.

(5)

Where an application for a review of an eligibility verification
notice is made under sub-paragraph (1) —

(a)

the notice is of no effect until the application is determined
or withdrawn, and

(b)

if the notice is upheld or varied, the period for compliance
(or the first period for compliance in the case of a periodic eligibility verification notice) begins with the day on which the outcome of the review is notified to the person to whom the eligibility verification notice was given.

Part 4 Appeals

Appeals against eligibility verification notices

14

(1)

A person who is given an eligibility verification notice may appeal
to the Tribunal against the notice on any of the following grounds—

(a)

the person is not a person to whom an eligibility
verification notice may be given;

(b)

the notice is not in accordance with this Schedule;

(c)

it is unduly onerous to comply with the notice.

(2)

An appeal under sub-paragraph (1) must be brought within the
period of 14 days beginning with—

(a)

the day on which the eligibility verification notice was
given, or

(b)

if the person seeks a review of the notice under paragraph
13 , the day on which the person is notified of the outcome
of the review.

(3)

On an appeal under sub-paragraph (1) , the Tribunal may—

(a)

amend the eligibility verification notice,

(b)

revoke the eligibility verification notice, or

(c)

dismiss the appeal.

(4)

Where an appeal under sub-paragraph (1) is brought against an
eligibility verification notice the notice is of no effect until the appeal is determined or withdrawn, unless the Tribunal orders otherwise.

Appeals against penalty notices

15

(1)

A person on whom a penalty is imposed under Part 2 of this
Schedule may appeal to the Tribunal against—

(a)

the penalty;

(b)

the amount of the penalty;

(c)

in the case of a daily rate penalty, the period during which
the daily amounts are payable.

(2)

But a person may not appeal against a decision of the Tribunal
to increase a daily rate penalty under paragraph 9 .

(3)

An appeal under sub-paragraph (1) may not be brought after the
end of the period of 30 days beginning with the date on which the penalty notice in relation to the penalty being appealed was given.

(4)

On an appeal under sub-paragraph (1) , the Tribunal may—

(a)

revoke the decision to impose the penalty;

(b)

amend the amount of the penalty;

(c)

amend the period within which all or part of the penalty
is to be paid;

(d)

dismiss the appeal.

(5)

If an appeal is brought under sub-paragraph (1) , the penalty
which is the subject of the appeal is not payable until the appeal is determined or withdrawn.

Appeals: further provision

16

(1)

If the Tribunal confirms or varies an eligibility verification notice
or the imposition of a penalty on an appeal under this Part of this Schedule, the person to whom the notice was given, or on whom the penalty was imposed, must comply with the notice or pay the penalty—

(a)

within such period as may be specified by the Tribunal,
or

(b)

if the Tribunal does not specify a period, within such
period as may be specified by the Secretary of State and notified to the person.

(2)

A decision by the Tribunal on an appeal under this Part of this
Schedule is final (despite the provisions of sections 11 and 13 of the Tribunals, Courts and Enforcement Act 2007).

Part 5 Code of practice

Requirement to issue a code of practice

17

(1)

The Secretary of State must issue a code of practice about
eligibility verification notices before giving the first such notice under this Schedule.

(2)

The code of practice must include provision about—

(a)

the exercise of the power to issue an eligibility verification
notice;

(b)

the processing, use and retention of information given in
response to an eligibility verification notice;

(c)

the circumstances in which the Secretary of State will
regard a person as having complied with an eligibility verification notice;

(d)

the imposition of penalties in relation to an eligibility
verification notice;

(e)

reviews under paragraph 13 .

(3)

Before issuing the code of practice, the Secretary of State must
carry out a public consultation on a draft of the code.

(4)

The Secretary of State must lay the code of practice before
Parliament.

(5)

The requirement in sub-paragraph (3) may be satisfied by public
consultation carried out before this paragraph comes into force.

Code of practice: revisions

18

(1)

The Secretary of State may from time to time revise and re-issue
the code of practice issued under paragraph 17 .

(2)

Paragraph 17 (3) and (4) apply in relation to a re-issue of a code
of practice as they apply in relation to the issue of the first code of practice.

(3)

But paragraph 17 (3) does not apply if the only changes to be
made to the code of practice are—

(a)

updates to references to legislation or documents which
have become out of date, or

(b)

in the opinion of the Secretary of State, other minor
corrections.

Part 6 General provision and interpretation

Relevant benefits

19

(1)

In this Schedule “relevant benefit” means any of the following
benefits—

(a)

universal credit;

(b)

employment and support allowance;

(c)

state pension credit.

(2)

Regulations may amend this paragraph so as to add, or remove,
types of benefit to, or from, the definition of “relevant benefit”.

(3)

Regulations under sub-paragraph (2) may add a type of benefit
only to the extent that the benefit is administered by, or on behalf of, the Secretary of State.

Accounts

20

(1)

In this Schedule “relevant account” means a personal account
which operates as—

(a)

a current account,

(b)

a savings account, or

(c)

an investment account,

including such an account which operates by reference to electronic money.

(2)

For the purposes of sub-paragraph (1) —

(a)

“personal account” means an account held by one or more
individuals other than an account that is provided for purposes relating to a trade, business or profession;

(b)

a current account includes any account—

(i)

in which individuals can hold, and from which
individuals can withdraw, money, and

(ii)

which is designed to allow the holder’s money to
be used for executing transactions with third parties,

but does not include credit card accounts or current account mortgages;

(c)

“electronic money” has the meaning it has in the Electronic
Money Regulations 2011 (S.I. 2011/99) (see regulation 2(1)).

(3)

In this Schedule a reference to a person holding an account
includes a reference to—

(a)

a person holding an account jointly with one or more
other persons, and

(b)

an account being, in any way, in the person’s name,

and “holder” is to be read accordingly.

(4)

Sub-paragraphs (5) to (8) apply for the purposes of this Schedule
where an eligibility verification notice is given to a body corporate (“P”).

(5)

The reference in paragraph 1 (2) (a) to P providing an account
includes a reference to another person in the same group as P providing an account if the condition in sub-paragraph (6) is met.

(6)

The condition is that P—

(a)

is able to identify accounts provided by the other person
that are within paragraph 1 (2) (b) , and

(b)

is able to obtain the information about those accounts
mentioned in paragraph 1 (3) .

(7)

For the purposes of sub-paragraph (5) , two persons are in the
same group if both are bodies corporate and—

(a)

one of them is a subsidiary of the other, or

(b)

both of them are subsidiaries of the same body corporate.

(8)

In sub-paragraph (7) , “subsidiary” has the meaning given by
section 1159 of the Companies Act 2006.

Service

21

In this Schedule, references to giving a notice or other document
(however expressed) include sending the notice or document by post.

General interpretation

22

In this Schedule—

“
benefit” means—

(a)

any relevant social security benefit as defined in
section 121DA(7), other than a state pension, and

(b)

any payment mentioned in subsection (2)(d) of
section 2 of the Employment and Training Act 1973, under arrangements made under that section;

“
daily rate penalty” means a penalty imposed under paragraph 8 (1) ;

“
the data protection legislation” has the same meaning as in
the Data Protection Act 2018 (see section 3(9) of that Act);

“
eligibility indicators” has the meaning given in paragraph 1 (2) (b) (ii) (and see paragraph 3 for conditions that
eligibility indicators must meet);

“
eligibility verification notice” has the meaning given in
paragraph 1 (1) ;

“
fixed penalty” means a penalty imposed under paragraph
7 (1) ;

“
incorrect payment” , in relation to a benefit, has the meaning
given in paragraph 1 (8) ;

“
notice” means notice in writing (and “notify” is to be read
accordingly);

“
periodic eligibility verification notice” has the meaning
given in paragraph 4 (4) ;

“
personal data” has the same meaning as in the Data
Protection Act 2018 (see section 3(2) of that Act);

“
processing”, in relation to information, has the same
meaning as in the Data Protection Act 2018 (see section 3(4) of that Act);

“
special category data” means the types of personal data the
processing of which is prohibited (to any extent) from time to time under Article 9 of Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation);

“
specified” means specified or described in an eligibility
verification notice, unless the context requires otherwise;

“
state pension” means—

(a)

a state pension under Part 1 of the Pensions Act
2014;

(b)

a retirement pension, including a Graduated
Retirement Benefit, under Part 2 or 3 of the Social Security Contributions and Benefits Act 1992;

(c)

a shared additional pension under Part 2 of that
Act;

“
transaction information”, in relation to an account, means
information which—

(a)

may enable the identification of the subject matter
or the amount of a transaction completed through the account, or

(b)

may enable the identification of a party to such a
transaction who is not a holder of the account,

but does not include information which relates to the payment of a relevant benefit into the account;

“
the Tribunal” means the First-tier Tribunal.

Relationship with other powers

23

Nothing in this Schedule limits the powers conferred on the
Secretary of State by sections 109BZA and 109BZB (powers to require information).”

The Schedule to be inserted in the Social Security Administration Act 1992 after Schedule 3 is—

“Schedule 3ZA

Section 80B

Recovery of amounts from bank accounts etc

Part 1 deductions from accounts

Direct deduction orders

1

(1)

Where an amount is recoverable from a liable person who holds an account
with a bank, the Secretary of State may make an order (a “direct deduction order”) in respect of that account.

(2)

A direct deduction order must be given to the bank with which the account
is held.

(3)

A direct deduction order may be—

(a)

a regular direct deduction order;

(b)

a lump sum direct deduction order.

(4)

A regular direct deduction order is an order requiring the bank—

(a)

to make regular deductions from the liable person’s account, and

(b)

to pay the amounts deducted to the Secretary of State.

(5)

A lump sum direct deduction order is an order requiring the bank—

(a)

to deduct from the liable person’s account an amount specified in
the order, and

(b)

to pay that amount to the Secretary of State.

(6)

The Secretary of State may give a regular direct deduction order and a
lump sum direct deduction order in respect of the same account.

(7)

The Secretary of State must give a copy of a direct deduction order to—

(a)

the liable person, and

(b)

in the case of a joint account, each of the other account holders.

(8)

Paragraphs 3 to 5 set out steps that the Secretary of State must take before
making a direct deduction order.

Accounts which may be the subject of a direct deduction order

2

(1)

The Secretary of State may make a direct deduction order in respect of any
account which—

(a)

is held by a liable person, and

(b)

contains an amount in which the Secretary of State considers the
liable person has a beneficial interest.

(2)

The Secretary of State may make a direct deduction order in respect of a
joint account only if the liable person does not hold a sole account in respect of which a direct deduction order may be made which would be likely to result in the recovery of the recoverable amount within a reasonable period of time.

(3)

But sub-paragraph (2) does not apply if all the holders of a joint account
are liable persons in relation to the same recoverable amount.

Requirement for banks to provide information

3

(1)

Before the Secretary of State makes a direct deduction order in respect of
a liable person’s account, the Secretary of State must obtain and consider bank statements for the account covering a period of at least three months.

(2)

To obtain the statements, the Secretary of State must give the bank with
which the Secretary of State believes the liable person holds the account a notice (an “account information notice”) requiring the bank to give the Secretary of State statements for the account covering—

(a)

the three months immediately before the notice is given, or

(b)

such longer period, ending immediately before the notice is given,
as may be specified in the notice.

(3)

An account information notice must—

(a)

contain the name of the liable person, and

(b)

identify the account (for example, by number and sort code).

(4)

The Secretary of State may give an account information notice relating to
an account only for the purpose of determining whether to make a direct deduction order in respect of the account.

(5)

At any time, for the purposes of determining whether to make a direct
deduction order in relation to a liable person, the Secretary of State may give a notice (“a general information notice”) to a bank requiring the bank to—

(a)

identify every account that the liable person holds with the bank,

(b)

for each identified account, give the Secretary of State the following
information—

(i)

a description of the type of account,

(ii)

identifiers for the account,

(iii)

if the account is a sole account, the balance of the account
at the date that it is identified, and

(iv)

if the account is a joint account, the name of each other
account holder, and

(c)

give the Secretary of State—

(i)

the correspondence address that the bank holds for the liable
person, and

(ii)

in the case of a joint account, the correspondence address
that the bank holds for each other account holder.

(6)

The Secretary of State may give—

(a)

more than one account information notice, or general information
notice, in relation to the same recoverable amount;

(b)

more than one account information notice in respect of the same
account.

(7)

A notice under this paragraph must—

(a)

set out how and when the bank must comply with the notice, and

(b)

explain that the bank may be liable to a penalty under paragraph
20 if it fails to do so without reasonable excuse.

(8)

The bank must comply with a notice given under this paragraph.

(9)

A bank that is given an account information notice, or a general information
notice, must not notify any of the following people that the notice has been given—

(a)

the liable person;

(b)

any other holder of the account in respect of which an account
information notice is given;

(c)

any other holder of an account identified in accordance with a
general information notice.

(10)

Information given to the Secretary of State in response to a notice under
this paragraph may be used by the Secretary of State for purposes connected with the Secretary of State’s functions under this Part of this Act, but not for any other purpose.

Joint accounts

4

(1)

Before making a direct deduction order in respect of a joint account, the
Secretary of State must make an assessment of the liable person’s beneficial interest in the amounts which are or may be in the account from time to time.

(2)

The Secretary of State must presume that the liable person’s beneficial
interest entitles them to the following share in any amounts which are or may be in the account from time to time—

$\frac{1}{N}$

where “N” is the number of account holders.

(3)

But the presumption does not apply where the Secretary of State has reason
to believe that the liable person’s beneficial interest is different from the presumed share.

(4)

In making an assessment under sub-paragraph (1) , the Secretary of State
must have regard to—

(a)

the bank statements obtained for the account under paragraph 3 , and

(b)

any responses to a notice under paragraph 5 .

Further requirements before making a direct deduction order

5

(1)

Before making a direct deduction order, the Secretary of State must give
the liable person, and, in the case of a joint account, each of the other account holders, a notice—

(a)

identifying the account that would be subject to the proposed order,

(b)

stating the amount that would be recoverable under the proposed
order,

(c)

setting out the terms of the proposed order,

(d)

if the account is a joint account, setting out the Secretary of State’s
duty to make an assessment as to the liable person’s beneficial interest and the presumption that applies (see paragraph 4 ), and

(e)

identifying, for the benefit of the liable person, the recoverable
amount to which the order relates.

(2)

The notice must invite the liable person and, in the case of a joint account,
each other account holder—

(a)

to make representations about the terms of the proposed order, and

(b)

in the case of a joint account, to make representations about the
liable person’s beneficial interest in amounts in the account.

(3)

The notice must set out the means by which, and the period within which,
representations may be made.

(4)

The period must be a period of at least one month beginning with the day
after the day on which the notice is given.

(5)

The Secretary of State must—

(a)

consider representations made in accordance with the notice, and

(b)

in light of those representations —

(i)

in the case of a joint account, make the assessment required
under paragraph 4 (1) , and

(ii)

in any case, decide whether, and in what terms, to make a
direct deduction in respect of the account.

(6)

A notice under sub-paragraph (1) may be given to the bank, including
before it is given to the persons to whom it is required to be given under that sub-paragraph (and for the effect of giving the notice to the bank see paragraph 11 (restrictions on accounts)).

(7)

Where a notice is given to the bank before it is given to the persons to
whom it is required to be given, in reliance on sub-paragraph (6) , the notice must be given to the other persons as soon as reasonably practicable after being given to the bank.

(8)

If, following the giving of a notice under this paragraph, the Secretary of
State decides not to make a direct deduction order, the Secretary of State must, as soon as reasonably practicable, notify every person given a notice under sub-paragraph (1) of the decision.

Amounts of deductions

6

(1)

The Secretary of State may make a direct deduction order only if satisfied
on the basis of information received by virtue of paragraphs 3 and 5 that the terms of the order—

(a)

will not cause the liable person, any other account holder, or any
person within sub-paragraph (2) to suffer hardship in meeting essential living expenses, and

(b)

are otherwise fair in all the circumstances.

(2)

A person is within this subsection if—

(a)

they live with the liable person, or any other account holder, for
some or all of the time, or

(b)

they are financially dependent on the liable person or any other
account holder.

(3)

The total amount of deductions to be made under a regular direct deduction
order in relation to any period of one month must not exceed 40% of the relevant amount.

(4)

For the purposes of sub-paragraph (3) , the “relevant amount” is the amount
that the Secretary of State reasonably expects to be credited to the account in question in (or in respect of) a typical month during the period for which the order will have effect, having regard to all statements given to the Secretary of State in relation to the account (see paragraphs 3 (2) and 15 (1) ).

(5)

The Secretary of State must ensure that the amount to be deducted and
paid to the Secretary of State under a direct deduction order does not exceed the recoverable amount to which the order relates.

Content and effect of direct deduction orders

7

(1)

A regular direct deduction order must specify—

(a)

the amounts, or a method for calculating the amounts, to be
deducted (see paragraph 6 ),

(b)

when those amounts are to be deducted and paid to the Secretary
of State, and

(c)

the penalties that may be imposed for a failure to comply (see paragraph 20 ).

(2)

A regular direct deduction order may specify different amounts, or different
methods for calculating the amounts, to be deducted at different times.

(3)

A lump sum direct deduction order must specify—

(a)

the amount, or method for calculating the amount, to be deducted,

(b)

when the amount is to be deducted and paid to the Secretary of
State, and

(c)

the penalties that may be imposed for a failure to comply (see paragraph 20 ).

(4)

A direct deduction order may not require an amount to be deducted from
a person’s bank account before the end of the period of one month beginning with the day after the day on which the Secretary of State complies with paragraph 1 (7) .

(5)

A bank must comply with a direct deduction order.

Bank’s administrative costs

8

(1)

A direct deduction order may include provision for the bank to deduct
from the liable person’s account an amount specified in, or calculated in accordance with, the order, for the purposes of meeting costs reasonably incurred by the bank in complying with the order.

(2)

A bank may deduct the costs to which they are entitled under a direct
deduction order immediately prior to making the deduction which is to be paid to the Secretary of State under the order.

(3)

In complying with paragraph 6 (1) and (3) in relation to a direct deduction
order the Secretary of State must take account of any deductions to be made under the order by virtue of sub-paragraph (1) .

Insufficient funds

9

(1)

Where the amount in an account is lower than the amount to be deducted
in accordance with a lump sum direct deduction order at the time that the bank is (apart from this sub-paragraph) required to make the deduction—

(a)

no deduction is to be made, and

(b)

the bank must notify the Secretary of State as soon as possible.

(2)

Where the amount in an account is lower than the amount to be deducted
in accordance with a regular direct deduction order at the time that the bank is (apart from this sub-paragraph) required to make the deduction—

(a)

the order is to be read as requiring the deduction and payment to
the Secretary of State to take place on the same day the following week, and

(b)

if, on that day, the amount in the account is lower than the amount
to be deducted in accordance with the order—

(i)

no deduction is to be made, and

(ii)

the bank must notify the Secretary of State as soon as
possible.

(3)

References in this paragraph to the amount to be deducted in accordance
with a direct deduction order include any amounts to be deducted in respect of a bank’s costs by virtue of provision under paragraph 8 (1) .

Non-working days

10

(1)

If (apart from this paragraph) a bank would be required to make a
deduction and payment under a direct deduction order on a day that is not a working day, the obligation to make the deduction and payment applies in relation to the next working day after that day.

(2)

In this paragraph, “working day” means any day other than—

(a)

Saturday or Sunday, or

(b)

a day which is a bank holiday under the Banking and Financial
Dealings Act 1971 in any part of the United Kingdom.

Restrictions on accounts

11

(1)

Where a notice under paragraph 5 (a “first notice”), or a direct deduction
order under paragraph 1 , is given to a bank in relation to a liable person’s account, the bank must—

(a)

ensure that the account is not closed at the request of an account
holder, and

(b)

if the notice relates to a proposed lump sum direct deduction order,
or the order is a lump sum direct deduction order—

(i)

secure that no transaction takes place (except for any
deduction under the order) which would result in the amount in the account falling below the specified amount or, if the amount in the account is already below that amount, falling any further, or

(ii)

take the action set out in sub-paragraph (2) .

(2)

The action is to—

(a)

transfer the specified amount, or the amount in the account if that
is less than the specified amount, from the account into a different account (a “hold account”) created by the bank for the sole purpose of holding that transferred amount, and

(b)

secure that no transaction takes place (except for any deduction
under the order) which would result in the amount in the hold account falling below the amount transferred.

(3)

Where a bank takes the action set out in sub-paragraph (2) in relation to
a lump sum direct deduction order, the order is to be read as if it required deductions to be made from the hold account.

(4)

A bank must ensure that taking the action set out in sub-paragraph (2) does not cause any disadvantage to the liable person, and in the case of a joint account, any other account holder, that the liable person, and any other account holder, would not have experienced if the bank had instead acted in accordance with sub-paragraph (1) (b) (i) .

(5)

The requirements in sub-paragraph (1) cease to apply when—

(a)

in relation to a first notice, a notice is given to the bank under paragraph 5 (8) (notice of decision not to make a direct deduction
order) or a direct deduction order is given to the bank under paragraph 1 ;

(b)

in relation to a direct deduction order—

(i)

all the deductions under the order have been made, or

(ii)

the order is revoked.

(6)

In this paragraph, “specified” means specified in, or calculated in accordance
with, a first notice or direct deduction order.

Applications to vary

12

(1)

Any holder of an account to which a direct deduction order applies may
apply to the Secretary of State to vary the order.

(2)

The Secretary of State must give any other holders of the account an
opportunity to make representations in relation to the application.

(3)

The Secretary of State must notify the applicant and any other account
holders of the Secretary of State’s decision on the application.

Variation

13

(1)

The Secretary of State may vary a direct deduction order (whether after an
application by an account holder or otherwise).

(2)

The provisions in this paragraph apply in relation to any variation of a
direct deduction order, including one that results from a review under paragraph 18 .

(3)

Where the Secretary of State proposes to vary a direct deduction order
other than under sub-paragraph (7) , the Secretary of State must give—

(a)

the liable person, and

(b)

in the case of a joint account, each of the other account holders,

an opportunity to make representations about the proposed variation.

(4)

The Secretary of State may comply with sub-paragraph (3) at the same time
as complying with paragraph 12 (2) .

(5)

A variation to a direct deduction order takes effect when the Secretary of
State gives the varied order to the bank or, if later, in accordance with the terms of the order as varied.

(6)

The Secretary of State must give a copy of the varied order to the liable
person and, in the case of a joint account holder, each other account holder.

(7)

The Secretary of State may vary a direct deduction order so that the order
applies to another account held by the liable person (including an account administered by a different bank) only if—

(a)

the variation is requested by the liable person, and

(b)

if the other account is a joint account, each of the other account
holders consents.

(8)

Where a direct deduction order is varied under sub-paragraph (7) —

(a)

if the order is varied so that it applies to an account administered
by another bank—

(i)

the reference in sub-paragraph (5) to “the bank” is to the
bank which administers that account,

(ii)

paragraph 7 (5) applies to the order as varied as it applied
to the original order, and

(iii)

the Secretary of State must notify the bank given the original
order of the effect of the variation, and

(b)

if the order is varied so that it applies to a joint account—

(i)

the requirement in sub-paragraph (6) is to give a copy of
the order to each other holder of that joint account, and

(ii)

if the original order applied to a joint account, the Secretary
of State must notify each other holder of that joint account of the effect of the variation.

(9)

The steps set out in paragraphs 3 to 5 do not apply to a decision to vary
a direct deduction order.

Revocation of direct deduction order

14

(1)

The Secretary of State may revoke a direct deduction order.

(2)

The Secretary of State must revoke a direct deduction order as soon as
reasonably practicable after becoming aware that—

(a)

the recoverable amount has been recovered, or

(b)

the liable person to whom the order relates has died.

(3)

Where the Secretary of State revokes a direct deduction order, the Secretary
of State must give a notice of the revocation to—

(a)

the bank to which the order was given,

(b)

the liable person (apart from in a case within sub-paragraph (2) (b) ),
and

(c)

in the case of a joint account, each of the other account holders.

Further information notices

15

(1)

For the purposes of determining whether to revoke or vary a direct
deduction order, the Secretary of State may give a bank a notice (a “further information notice”) requiring the bank—

(a)

to give the Secretary of State statements for an account held by the
liable person covering—

(i)

the three months immediately before the notice was given,
or

(ii)

such longer period, ending immediately before the notice
was given, as may be specified in the notice;

(b)

to take the steps set out in paragraphs (a) to (c) of paragraph 3 (5) .

(2)

Sub-paragraphs (6) , (7) and (10) of paragraph 3 apply in relation to a further
information notice as they apply in relation to a notice under that paragraph.

(3)

Before giving a further information notice to a bank requiring statements
to be given in respect of a joint account, the Secretary of State must notify each account holder other than the liable person—

(a)

that the notice will be given, and

(b)

of the effect of the notice.

(4)

A further information notice may be given to the bank before, at the same
time as or after the Secretary of State complies with paragraph 13 (3) .

Suspending of direct deduction orders

16

(1)

The Secretary of State may suspend and re-start the requirement to make
deductions and payments under a regular direct deduction order at any time by notifying the bank to which the order was given.

(2)

The Secretary of State must notify the liable person and, in the case of a
joint account, each other account holder, if the requirement is suspended or re-started under this paragraph.

Cessation on death of liable person

17

A bank ceases to be subject to a direct deduction order on becoming aware
of the liable person’s death.

Reviews

18

(1)

This paragraph applies where the Secretary of State—

(a)

makes a direct deduction order,

(b)

varies a direct deduction order, or

(c)

decides not to vary a direct deduction order in response to an
application under paragraph 12 .

(2)

Any of the following persons (“relevant persons”) may apply to the
Secretary of State for a review of the decision to make, to vary or not to vary the order—

(a)

the liable person to whom the order relates, and

(b)

in the case of a joint account, any other account holder.

(3)

An application under sub-paragraph (2) must be made before the end of
the period of one month beginning with the day after the day on which the applicant was—

(a)

given a copy of the order or the order as varied, or

(b)

notified of the decision not to vary the order.

(4)

An application for a review under this paragraph may not be made on, or
include, any ground relating to the existence or amount of a recoverable amount (unless the amount is said to be incorrectly stated in the order).

(5)

On a review, the Secretary of State may—

(a)

uphold the decision,

(b)

vary the order, or

(c)

revoke the order.

(6)

After a review has been carried out, the Secretary of State must notify the
applicant and other relevant persons of the outcome of the review.

(7)

See paragraph 13 for provisions about varying a direct deduction order.

Appeals

19

(1)

A relevant person may appeal to the First-tier Tribunal against—

(a)

the making of a direct deduction order,

(b)

the variation of a direct deduction order, or

(c)

a refusal to vary a direct deduction order after a request by a
relevant person.

(2)

A relevant person may not appeal under sub-paragraph (1) in relation to
a matter within paragraph (a) , (b) or (c) of that sub-paragraph unless they—

(a)

made representations in accordance with paragraph 5 , 12 or 13 (or,
in relation to a variation of a direct deduction order, requested the variation), or

(b)

sought a review under paragraph 18 ,

in relation to the matter.

(3)

Sub-paragraph (2) does not apply where a direct deduction order is varied
on a review under paragraph 18 .

(4)

An appeal under sub-paragraph (1) must be brought within the period of
one month beginning with the day after the day on which the appellant was—

(a)

given a copy of the direct deduction order, or the varied deduction
order, in a case within sub-paragraph (1) (a) or (b) , or

(b)

notified under sub-paragraph (3) or, where a review was sought, paragraph 18 (6) , in a case within sub-paragraph (1) (c) .

(5)

An appeal under sub-paragraph (1) may not be made on, or include, any
ground relating to the existence or amount of a recoverable amount (unless the amount is said to be incorrectly stated in the order).

(6)

Where a relevant person appeals under this paragraph in relation to a
direct deduction order, the First-tier Tribunal may suspend the requirement on the bank to which the order has been given to give effect to the order for some or all of the time until the appeal (including any onward appeal) is withdrawn, abandoned or finally determined.

(7)

On an appeal under sub-paragraph (1) , the First-tier Tribunal may—

(a)

amend the direct deduction order;

(b)

revoke the direct deduction order;

(c)

dismiss the appeal.

(8)

In this paragraph, “relevant person” has the meaning that it has in paragraph 18 .

Part 2 Penalties

Penalties for failure to comply

20

(1)

If the Secretary of State has reasonable grounds to believe that a bank—

(a)

has failed to comply with a requirement imposed by or under this
Schedule, and

(b)

has no reasonable excuse for the failure,

the Secretary of State may impose on the bank a penalty of £500.

(2)

The Secretary of State may not impose a penalty before giving the bank
an opportunity to make representations about their compliance.

(3)

The Secretary of State imposes a penalty by giving the bank a notice of the
penalty (a “penalty notice”).

(4)

A penalty notice must state—

(a)

the amount of the penalty,

(b)

the period within which it must be paid, and

(c)

the bank’s right to appeal against the penalty.

(5)

The Secretary of State may vary or revoke a penalty notice by giving a
notice to that effect to the bank.

Recovery of penalties

21

(1)

In England and Wales, a penalty imposed under this Part of this Schedule
is recoverable—

(a)

if the county court so orders, as if it were payable under an order
of that court;

(b)

if the High Court so orders, as if it were payable under an order
of that court.

(2)

In Scotland, a penalty imposed under this Part of this Schedule may be
enforced in the same manner as an extract registered decree arbitral bearing a warrant for execution issued by the sheriff court of any sheriffdom in Scotland.

Appeal against a penalty notice

22

(1)

A bank on which a penalty is imposed under paragraph 20 may appeal to
the First-tier Tribunal against the imposition of the penalty.

(2)

An appeal under sub-paragraph (1) may not be brought after the end of
the period of one month beginning with the date on which the penalty notice in relation to the penalty being appealed was given.

(3)

On an appeal under sub-paragraph (1) the Tribunal may confirm or quash
the decision to impose the penalty.

(4)

If an appeal is brought under sub-paragraph (1) , the penalty which is the
subject of the appeal is not payable until the appeal (including any onward appeal) is determined or withdrawn.

Part 3 General

Interpretation

23

(1)

In this Schedule—

“
bank” means a person who is authorised—

(a)

to accept deposits, or

(b)

to issue electronic money;

“
direct deduction order” means a regular direct deduction order or a
lump sum direct deduction order;

“
joint account” means an account held by more than one person;

“
lump sum direct deduction order” has the meaning given by paragraph 1 (5) ;

“
regular direct deduction order” has the meaning given by paragraph
1 (4) ;

“
sole account” means an account held by one person.

(2)

For the purposes of paragraph (a) in the definition of “bank” in sub-paragraph (1) —

(a)

the reference to accepting deposits is to carrying on the regulated
activity of accepting deposits for the purposes of the Financial Services and Markets Act 2000 (see section 22 of that Act and article 5 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544)), and

(b)

a person is authorised to accept deposits if they are an authorised
person or an exempt person in relation to the carrying on of that activity for the purposes of the Financial Services and Markets Act 2000.

(3)

For the purposes of paragraph (b) in the definition of “bank” in sub-paragraph (1) , a person is authorised to issue electronic money if—

(a)

the person is an electronic money institution, and

(b)

the person is authorised or registered under Part 2 of the Electronic
Money Regulations 2011 (S.I. 2011/99) in relation to carrying on the activity of issuing electronic money.

(4)

In sub-paragraph (3) , “electronic money” and “electronic money institution”
have the meanings given by regulation 2(1) of those Regulations (and references to the issue of electronic money are to be construed in accordance with those Regulations).

(5)

In this Schedule, references to an amount in an account are to an amount
standing to the credit of the account.

(6)

In this Schedule, references to a person holding an account include
references to—

(a)

a person holding an account jointly with one or more other persons,

(b)

a person being a signatory, or one of the signatories, to an account,
and

(c)

an account being, in any other way, in the person’s name,

and “holder” is to be read accordingly.

Regulations

24

(1)

Regulations may make further provision about direct deduction orders.

(2)

Regulations under this paragraph may, among other things, make
provision—

(a)

about how notices and orders are to be given by the Secretary of
State under this Schedule;

(b)

about how notices and information are to be given to the Secretary
of State under this Schedule;

(c)

about the calculation of amounts to be deducted, including—

(i)

about establishing whether deductions would cause a person
to suffer hardship in meeting essential living expenses, and

(ii)

about amounts which are, or are not, to be taken into account
in calculating the amounts credited to an account for the purposes of paragraph 6 (3) ;

(d)

setting a maximum percentage that is less than 40% for the purposes
of paragraph 6 (3) in some or all cases;

(e)

amending the amount for the time being specified in paragraph
20 (1) to reflect a change in the value of money;

(f)

about the duties of banks in relation to direct deduction orders,
including before a direct deduction order is made;

(g)

about costs which a bank may recover by virtue of paragraph 8 or
from the Secretary of State;

(h)

about the interaction between direct deduction orders under this
Schedule and similar orders under any other enactment.

(3)

Regulations under this paragraph may, among other things, apply this
Schedule, as it applies to banks, to other types of person who provide financial products or services (including products or services that operate by reference to cryptoassets or any similar product or service).

(4)

In sub-paragraph (3) , “cryptoasset” has the meaning given in section 84A
of the Proceeds of Crime Act 2002.

(5)

Before making relevant regulations in reliance on sub-paragraph (2) (a) , (b) , (f) or (g) , the Secretary of State must consult—

(a)

persons who appear to the Secretary of State to represent the
interests of banks, and

(b)

such other persons (if any) as the Secretary of State considers
appropriate.

(6)

Before making relevant regulations in reliance on sub-paragraph (3) , the
Secretary of State must consult—

(a)

persons who appear to the Secretary of State to represent the
interests of persons to whom provisions about direct deduction orders would be applied by the regulations, and

(b)

such other persons (if any) as the Secretary of State considers
appropriate.

(7)

In this paragraph, “relevant regulations” means—

(a)

the first regulations made in reliance on the provisions in question,
and

(b)

any subsequent regulations made in reliance on those provisions
which—

(i)

impose new duties on banks, or

(ii)

make changes to existing duties or provisions which, in the
opinion of the Secretary of State, are more than minor.”

Part 1 Functions exercisable on behalf of public authorities

Chapter 1 Key concepts

1 Core functions of the Minister for the Cabinet Office

(1)

(a)

(b)

(c)

(d)

(2)

(a)

(i)

(ii)

(b)

(c)

(3)

2 Interaction with other public authorities etc

(1)

(a)

(b)

(2)

(a)

(b)

(3)

(4)

(a)

(b)

(5)

(a)

(b)

Chapter 2 Investigatory powers

Information

3 Information notices

(1)

(a)

(b)

(2)

(3)

(4)

(a)

(b)

(5)

(6)

(a)

(b)

(c)

(d)

(7)

(a)

(b)

(8)

(a)

(b)

4 Reviews

(1)

(2)

(3)

(4)

(a)

(b)

(c)

(5)

(a)

(b)

(6)

5 Information sharing

(1)

(2)

(3)

(4)

(a)

(b)

6 Amendment of the Investigatory Powers Act 2016

Powers of entry, search and seizure etc

7 Police and Criminal Evidence Act 1984 etc powers

(1)

(2)

(a)

(b)

(c)

(d)