Officials will write to those affected by the errors
Nearly 200 benefit claimants will be refunded up to £5,000 each by the Department for Work and Pensions (DWP), it has confirmed, as penalties that were incorrectly issued over the past few years are rescinded.
The department has identified 197 cases where it wrongly issued Administrative Penalties – or ‘Ad Pens’ – between 2023 and 2025, which are charged to claimants suspected of benefit fraud.
These are offered to these claimants “as an alternative to a criminal prosecution,” the DWP’s latest annual report states, only where the evidence points to a “realistic prospect of conviction”.
Each is worth up to £5,000, the department has confirmed, with the minimum amount for an Ad Pen being £350.
An exercise by officials has revealed 128 cases from 2023/24 and 69 from 2024/25 where these penalties should not have been issued. Reasons for this included the evidence being gathered not being enough for conviction, or the circumstances of the case not being fully considered.
The figures mean that nearly a quarter (23 per cent) of people who accepted Ad Pens during the affected time frame will have them refunded.
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 issue will be contacted by the DWP. They will still be expected to pay any outstanding benefit overpayment.
The department has now made changes to strengthen its Ad Pen policy, including new guidance for investigators and an independent decision-making panel. Only 68 Ad Pens were issued in 2025/26.
The refunds come as the DWP continues to crack down on fraud and error in the welfare system, which cost an estimated £9.9bn in 2025/26.
Under the Public Authorities (Fraud, Error and Recovery) Act, the department will gain new powers from October which will enable it to force banks to share financial information, deduct funds directly from accounts, and impose driving bans in certain cases.
Several campaigners have criticised the new powers, with civil liberties group Big Brother Watch claiming they will “usher in an unprecedented system of mass financial surveillance”.
The government has said it aims to save £14.6bn over the next five years by tackling rising benefit debts, with £400 million committed to create 3,000 new roles across data and investigations.
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