Nearly 200 benefit claimants are being refunded after the Department for Work and Pensions (DWP) found that penalties of up to £5,000 had been wrongly imposed in cases involving suspected benefit fraud.
Review Finds 197 Penalties Were Issued Incorrectly
The DWP identified 197 Administrative Penalties, commonly known as Ad Pens, that should not have been issued across the 2023/24 and 2024/25 periods.
Administrative Penalties can be offered to people suspected of benefit fraud as an alternative to criminal prosecution. According to the department’s annual report, they should be used only when the available evidence indicates a “realistic prospect of conviction.”
The penalties carry a minimum value of £350 and can reach £5,000.
Officials found 128 affected cases in 2023/24 and another 69 in 2024/25. Problems included cases where investigators had not gathered sufficient evidence to support a realistic prospect of conviction, as well as cases where the claimant’s circumstances had not been fully considered.
The findings mean about 23% of people who accepted Administrative Penalties during the affected period are having those penalties refunded.
DWP Says Claimants Will Be Contacted
As reported by The Independent, the department says it identified the cases after proactively reviewing its use of Administrative Penalties.
A DWP spokesperson said: “In an effort to identify opportunities for improvement, we proactively reviewed our use of Administrative Penalties and identified a small number of cases where they were incorrectly applied.
“We have put this right by removing and refunding those penalties, contacting affected customers, and strengthening our processes to ensure decisions are made consistently and appropriately in future.”
Every claimant affected by the errors will be contacted by the department. While the incorrectly imposed penalties are being removed and refunded, affected people will still be responsible for repaying any underlying benefit overpayment that remains outstanding.
New Safeguards Follow the Errors
The department has changed how Administrative Penalties are handled following the review.
Those changes include new guidance for investigators and the introduction of an independent decision-making panel, intended to make decisions more consistent and ensure penalties are used only in appropriate cases.
The number of Administrative Penalties subsequently fell sharply. Only 68 Ad Pens were issued in 2025/26, according to the figures reported.
The refunds therefore address a specific problem with how fraud penalties were applied rather than canceling the government’s wider efforts to recover money lost through benefit fraud and error.
Benefit Fraud and Error Cost an Estimated £9.9 Billion
The repayments come as the government expands its efforts to tackle losses across the welfare system.
Fraud and error were estimated to have cost £9.9 billion in 2025/26. The government says it wants to save £14.6 billion over five years by tackling rising benefit debt and has committed £400 million to create 3,000 roles focused on data and investigations.
The policy push also includes new recovery and information-gathering powers under the Public Authorities (Fraud, Error and Recovery) Act.
From October, the department is expected to gain powers that can require banks to provide financial information, allow money to be deducted directly from accounts and enable driving bans in certain circumstances.
New Fraud Powers Have Drawn Privacy Concerns
The expansion has faced criticism from campaigners concerned about the scale of financial monitoring involved.
Civil liberties organization Big Brother Watch has argued that the measures will “usher in an unprecedented system of mass financial surveillance.”
The dispute places the 197 incorrectly issued penalties in a broader debate over how the government balances fraud prevention, debt recovery and safeguards for benefit recipients.
For the people directly affected by the review, the immediate outcome is more concrete: the DWP will contact all 197 claimants whose Administrative Penalties were found to have been incorrectly applied.
