The Department for Work and Pensions (DWP) is refunding claimants after rescinding nearly 200 administrative penalties for benefit fraud, following a review that found the sanctions were wrongly offered in some cases.
The penalties, often called “ad pens”, are offered as an alternative to prosecution. The DWP says the problem was down to procedural failings and cases where the evidence did not meet the threshold expected. Affected claimants are receiving, or are due to receive, refunds for the extra penalty, but the DWP says they are still required to repay any underlying benefit overpayments linked to the original decision.
What are administrative penalties?
Administrative penalties are offered to people suspected of benefit fraud. They are worked out at 50% of the overpaid amount, capped at £5,000, and are added on top of the repayment of the overpayment itself. The DWP says it cannot simply impose these penalties at will. They are meant to be offered only when fraud investigators believe there is enough evidence to provide a realistic prospect of a criminal conviction.
The review found that a sizeable share of penalties accepted by claimants were later judged to have been wrongly offered. The accounts show 128 of 567 penalties issued in 2023-24 were later rescinded, alongside 69 of 272 issued in 2024-25.
Refunds and repayment requirements
That totals 197 cancelled penalties – around 23% across the two years – with refunds either already made or still to be paid. The department has stressed the cancellations do not wipe out the requirement to repay the benefit overpayment itself.
In its report, the DWP said: “We identified that some administrative penalties that were offered and accepted should not have been offered in the first place and action has been taken to correct this.” It added that the issues included “procedural errors” and cases where evidence, once reviewed again, was not considered strong enough to offer a “reasonable prospect of securing a conviction”. The department also said that in some instances the circumstances had not been fully taken into account when the original decision was made.
Civil Service World asked the DWP how much was being refunded, but no total was given. Based on the minimum £350 penalty and the £5,000 maximum, the value of the cancelled penalties could fall somewhere between £68,950 and £985,000.
DWP response and next steps
The review comes as the department continues to focus on benefit fraud, estimating £6.8bn was lost to fraud-related overpayments in 2025-26, with more than 600 fraud prosecutions launched during the year. Despite far higher numbers of administrative penalties in earlier years, DWP fraud investigation teams secured just 68 administrative penalties in 2025-26, according to the same accounts.
The DWP says it has tightened its approach following the review, including refreshed training for investigators, stronger guidance, a permanent method for deciding when a penalty can be offered, and greater involvement from independent senior decision-makers. 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.”
The department added that its counter-fraud and compliance work generated £1.8bn in savings during 2025-26.
