The Department for Work and Pensions (DWP) has refunded thousands of pounds after admitting that nearly 200 benefit fraud penalties were wrongly issued.
A review found that 197 administrative penalties issued during 2023–24 and 2024–25 should not have been imposed because of procedural errors and insufficient evidence.
The findings, first reported by Civil Service World, showed that around 23 per cent of penalties issued across the two years were subsequently withdrawn.
Affected claimants are now receiving, or are due to receive, refunds for the penalties they were wrongly charged.
However, those whose penalties have been cancelled remain liable for repaying any original benefit overpayments that led to the fraud investigations.
The DWP issued 567 administrative penalties in 2023–24, of which 128 were later withdrawn.
A further 69 of the 272 penalties issued in 2024–25 were subsequently cancelled.
Administrative penalties, commonly known as “ad pens”, are financial sanctions offered to people suspected of benefit fraud as an alternative to criminal prosecution.
The penalty is set at half the value of the benefit overpayment, up to a maximum of £5,000, and is imposed in addition to repaying the original overpayment.
The DWP declined to disclose the total amount being refunded.
Based on the minimum penalty of £350 and the maximum of £5,000, the total value of the 197 cancelled penalties could range from just under £69,000 to almost £1 million.
Administrative penalties can only be offered where investigators believe there is a realistic prospect of securing a criminal conviction.
The DWP acknowledged the problems in its annual report, saying some penalties “should not have been offered in the first place” and that action had been taken to correct the errors.
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The department identified procedural mistakes, evidence that did not meet the threshold for prosecution, and failures to properly consider individual circumstances as reasons penalties had been incorrectly issued.
A DWP spokesman told Civil Service World that the department had proactively reviewed its use of administrative penalties and identified cases where they were incorrectly applied.
Affected claimants have been contacted and their penalties removed and refunded.
The department has since introduced changes to strengthen its approach, including updated training for criminal investigators, improved operational guidance and a permanent framework for deciding when administrative penalties can be offered.
Additional oversight from independent senior decision‑makers has also been introduced.
The reforms come as the DWP faces continued pressure to tackle fraud and overpayments across the benefits system.
The department estimates that fraud‑related overpayments cost £6.8billion during 2025–26.
More than 600 prosecutions were initiated during the same year, while the number of administrative penalties issued fell sharply to 68 — significantly lower than in the preceding two financial years.
The latest review means hundreds of claimants have had penalties removed after the DWP determined they should not have been imposed in the first place.
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