Southern Housing (202323460)

REPORT

COMPLAINT 202323460

Southern Housing

28 February 2025

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 the resident’s concerns about its administration of his service charge account.
2. We have also considered the landlord’s complaint handling.

Background

3. The resident is a shared ownership leaseholder of a flat. The landlord, a housing association, is the head leaseholder.
4. On 26 June 2023 the resident contacted the landlord about an overcharge it had made of his service charge.  It apologised that the resident’s direct debit payment had not been amended properly and said it would make a refund to his bank account. It said the resident could make a formal complaint about this. That day the landlord processed a refund to the resident of £1,480.14. This was the credit balance of the resident’s service charge account as of 1 June 2023.
5. The resident submitted a complaint to the landlord on 4 July 2023. He said the direct debit payments it had taken were “out of control” and this was an “abuse of trust”. He said he had needed to spend several days looking into past direct debit transactions and  he had been caused cash flow issues. He said his mental health had also been affected. He asked that the landlord investigate direct debit payments over the last 10 years and compensate him for the distress and inconvenience caused.
6. The landlord provided its stage 1 complaint response to the resident on 26 July 2023. In explanation of how the overcharge had occurred it said:
   1. after a reconciliation charge was added to the resident’s account in October 2022, an adjustment was made to the resident’s direct debit in November 2022.
   2. during November 2022 other system adjustments were made due to a change in the resident’s service charge and a refund of a building safety payment.
   3. the above adjustments resulted in an error in the direct debit amount.
   4. issues continued with a payment being taken twice in March 2023.
   5. the direct debit amount was adjusted again April 2023, for an unknown reason, with an increased payment taken from the resident’s account in April and May 2023.
7. The landlord acknowledged that there had been a “serious service failure” in its handling of the resident’s account and it apologised for this. It said the resident’s direct debit amount had been changed, and its finance department had confirmed it was now deducting the correct amount.
8. The landlord said it could understand the confusion and impact of the issues on the resident’s life and finances. It offered him a payment of £250 in recognition of this.
9. The resident escalated his complaint on 27 July 2023. He requested increased compensation and asked that the landlord consider whether there had been any issues with his direct debit over the last 10 years.
10. The landlord issued its stage 2 complaint response on 25 August 2023. It said:
    1. it was “not feasible” for it to identify other occasions when direct debits were not collected correctly.
    2. over the last 10 years it had changed its direct debit platform 3 times, and it no longer had access to previous platforms.
    3. it had changed its direct debit platform in August 2023 to add functionality to help avoid issues the resident had experienced reoccurring.
    4. it had reviewed the £250 award it had made at stage 1 of the complaints process and considered this amount to be fair and reasonable.

Assessment and findings

Policies and procedures

11. The landlord has a compensation policy. This outlines different types of compensation it can award, including for quantifiable loss, and discretionary awards for time and trouble/distress and inconvenience. This says compensation for quantifiable loss can include reimbursing bank charges for errors in the landlord’s direct debit collection. The compensation policy says:
    1. the resident must provide evidence of costs incurred.
    2. the landlord may also pay discretionary compensation on top of compensation to cover the resident’s loss, if that is appropriate.
12. The landlord operates a 2 stage complaints process. This says it will acknowledge a complaint within 5 working days. It aims to respond to stage 1 complaints within 10 working days of acknowledgement, and to those at stage 2 within 20 working days.

Scope of the investigation

Impact of issues on his health

13. The resident said that issues at the service charge collection had a negative impact on his mental health. We are sorry to learn of this. While the resident’s concerns are acknowledged, the Ombudsman cannot draw conclusions on the causation of, or liability for, impacts on health. This is a matter which is most appropriately decided by a court following a claim for damages. It could also be considered by way of a personal injury claim through the landlord’s insurer, and it would be appropriate for the landlord to provide the resident with details of how he can make such a claim should he request  this. However, this investigation has considered the landlord’s response to the resident’s concerns about the impact on his health and well-being when considering his complaint. We have also considered any distress and inconvenience which the resident experienced as a result of any failings by the landlord.

Administration of the resident’s service charge account

14. The resident raised concerns that there may have been other errors by the landlord in its collection of his service charge over a 10-year period. While we understand the resident’s concerns around this, the Ombudsman encourages residents to raise complaints with their landlords at the time the events occurred.
15. The resident raised concerns about the landlord’s handling of payments taken by direct debit in June 2023. The landlord investigated and identified issues with payments taken between November 2022 and May 2023., leading to an overcharge to the resident. Taking this into account, our investigation will focus on the landlord’s handling of this matter since October 2022. However, we have also considered how the landlord’s addressed and responded to concerns the resident raised that issues may have pre-dated this.

The landlord’s handling of the resident’s concerns about its administration of his service charge account

16. The landlord has acknowledged failings in its handling of direct debit payments over a 6-month period between November 2022 and May 2023. This resulted in a considerable overcharge to the resident, taken via direct debit. After the resident contacted it in June 2023, the landlord identified the overcharge and took prompt steps to refund the overcharge to the resident. That was appropriate.
17. After the resident made a complaint to the landlord it acknowledged the failings in its service which had led to the overcharge to the resident. It confirmed that it had now adjusted the resident’s direct debit to the correct amount. The landlord also explained to the resident that it had made a change to its direct debit platform in August 2023, which would help to avoid issues reoccurring. It was appropriate that the landlord explained this to the resident to provide him with some reassurance that the issues he had experienced had been addressed.
18. In his complaint the resident said the landlord’s mistakes in over-collecting his service charge had caused him cash flow issues and had affected his mental health. He also said he had needed to spend time looking at past direct debit transactions. We do not doubt the resident was caused distress and inconvenience. In recognition of the impact of this failing on the resident, the landlord offered him compensation of £250. With consideration to the circumstances of the case, and with reference to the Ombudsman’s remedies guidance, we consider this was appropriate redress that recognised the impact of the landlord’s failing on the resident over several months.
19. The resident also raised concerns about the landlord’s collection of direct debits in the period prior to November 2022. The landlord responded to this point in its stage 2 response. However, it said that it was “not feasible” for it to consider this issue as its direct debit platform had changed 3 times during this period. It said it no longer had access to previous platforms. But it is unclear why the landlord was unable to provide or direct the resident to rent statements for this period.
20. When providing information to us, the landlord provided rent statements showing the monthly charges, payments made, and the balance of the resident’s rent account going back to March 2014. It would have been reasonable for the landlord to have provided this information to the resident when responding to his complaint.
21. The resident’s concerns that he may also have been overcharged prior to November 2022 were understandable. Providing him with any information it had to show how he had been charged previously could have reassured him about earlier payments it had taken. Not doing so was a failing, given it is clear this information was available to the landlord. We acknowledge that the resident also had a responsibility to monitor his own bank account and make the landlord aware of any errors in a timely manner. However, overall we have found service failure in the landlord’s handling of concerns about its administration of the resident’s service charge account.
22. We note that the landlord’s compensation policy states that it can reimburse bank charges when there have been errors in its direct debit collection. The resident had not specifically raised any concerns that he had incurred bank charges because of the issues. However, we have recommended that the landlord offer to consider any evidence from the resident of bank charges incurred due to the issues in its direct debit collection, should he provide this.

Complaint handling

23. The resident complained to the landlord on 4 July 2023. In its stage 1 complaint response of 26 July 2023 the landlord referred to a complaint acknowledgement it had sent the resident. However, there is no record of this acknowledgement in documents we have seen. It should have appropriately stored its complaints correspondence to demonstrate that it was acting in line with its complaints policy. Not doing so was a shortcoming in record keeping.
24. While the landlord’s stage 1 complaint response of 26 July 2023 was only slightly outside the timescales set out in its complaints policy, it would still have been reasonable for it to have acknowledged and apologised for this short delay in its eventual response. That it did not do so was a failing.
25. The landlord’s stage 2 complaint response to the resident was timely. However, as identified earlier, it would have been reasonable for it to have provided the resident with the rent statements it had available. This would have provided him with some reassurance about payments taken previously. Overall, we have found service failure in the landlord’s handling of the resident’s complaint.

Determination

26. In accordance with paragraph 52 of the Housing Ombudsman Scheme, there was:
    1. service failure in the landlord’s handling of the resident’s concerns about its administration of his service charge account.
    2. service failure in the landlord’s complaint handling.

Orders and recommendations

Orders

27. Within 4 weeks of the date of this report, the landlord should:
    1. write to apologise to the resident for the failings we have identified in this report.
    2. pay the resident compensation of £350, made up of:
       1. £250 previously awarded by the landlord.
       2. £100 for the impact of further failings we have identified in its handling of the resident’s concerns about its administration of his service charge account.
    3. provide the resident with rent statements going back to March 2014 to provide him with reassurance about the service charge payments previously made.
28. The landlord should provide us with evidence of its compliance with these orders.

Recommendations

29. Within 4 weeks of the date of this report the landlord should:
    1. contact the resident to offer to consider evidence of any bank charges he incurred as a result of errors in its direct debit collection, in line with its compensation policy.
    2. consider whether it has adequate processes in place to notify residents in advance of changes to direct debit payments.