Determining whether Money Management is appropriate

MSD must assess whether Money Management is suitable for a client and their circumstances before it may be imposed as a non-financial sanction.

Clients will continue to get their full benefit payment while on Money Management with 50% of their main benefit going to a payment card and 50% paid to their bank account. This is instead of a 50% financial sanction.

MSD may consider any relevant factors before choosing to impose Money Management. Some examples of factors that should be considered are outlined below.

Clients who get a 50% financial sanction will have their full benefit rate restored as soon as they recomply with their obligations. This is different from Money Management, which always lasts for 4 weeks, no matter when a client completes their recompliance activity.

It may be more suitable for a client to get a financial sanction than be subject to Money Management if they are able to complete their recompliance activity quickly.

For example, if there is an activity available on the first day the sanction would be applied, it may be better to impose a financial sanction for one day instead of imposing Money Management for 4 weeks. If an activity isn’t available for 2 weeks, it may be better to impose Money Management instead of reducing their benefit for 2 weeks.

Clients will have to pay their accommodation costs using the payments they receive into their bank account (including any Working for Families tax credits and supplementary assistance) as the Money Management supplier group doesn’t include housing providers.

If a client is unable to pay their housing costs from the benefit payments that go into their bank account while on Money Management, this will seriously impact their living situation. It would not be suitable to impose Money Management if it would worsen a client’s housing situation compared to a different sanction.

Any redirections, offsets, or debt repayments will be deducted from the payment going into a client’s bank account. It may not be possible for a client to make some of these payments while they are on Money Management.

MSD should discuss this with the client before deciding whether to impose Money Management.

Clients who make frequent hardship applications may benefit from Money Management as the payment card can only be used to buy essential items.

If a client is already working with a budgeting service to manage their finances, Money Management may not be appropriate. 

Money Management may not be suitable for clients who frequently have changes in their income.

If a client declares a change in their income after their main benefit payment has been issued to their payment card, it may result in an overpayment. If a client is overpaid, a debt will be established as the payment cannot be adjusted.

If a client is underpaid, they will be issued arrears directly into their bank account. This may reduce the effectiveness of the sanction.

Payments on a client’s payment card can only be used at particular suppliers. Depending on where a client lives, they may not have access to many suppliers in their area.

Money Management would not be suitable if a client cannot reasonably spend the money on their payment card.

If a client has particular circumstances that would be worsened by being money managed, Money Management is not appropriate.

For example, if a client is experiencing family violence or a domestic emergency, Money Management may cause additional stress. MSD should consider a different sanction where possible.