SOCIAL SECURITY CLAIMANTS
John O'Neill made a brief presentation to the Social development Committee.
Q. You have stated that claimants will be encouraged to use the new system could you expand on what you mean by encouraged? Will there be undue pressure, and is this for new claimants or existing claimants?
A. New claimants from April 2003 will hopefully be using the system and existing claimants phased in through time. The claim forms will be changed so that the new system will be the preferred method. Predominately through a publicity campaign there will be no financial incentive. No one will be forced to join the new system. If there is no bank details, payment will proceed through order books or giros.
Q. My constituents are already coming under pressure to use the new system. They are being told by Social Security staff and Post Office staff that they will not have the option that they will have to move to the new system. You are saying this isn't the case?
A. We have an agreement with the Post Office that there will be no active marketing before April 2003. At present the Social Security Agency preferred method of payment is Automated Credit Transfer (ACT) but claimants are offered all methods of payments.
Q. My concern that old people will be pressurised to use a system that they are not familiar with and not comfortable with, are there any charges connected with this?
A. It is not our intention to force elderly people into a situation were they clearly cannot manage a bank account. It will be our responsibility to identify these people and actively consider these people for an alternative method of payment. In terms of charges, Universal Banking Initiative is meant to create a free banking system for day-to-day transactions.
Q. What happens if the accounts are cleared every time money is available? Will these accounts be closed?
A. These accounts will not be closed if this happens.
Q. If using an ATM and you get £59.50 you will only be able to lift £50. How can you lift the rest?
A. Go into the Bank Branch.
Q. What identification will you need to put money in?
A. The money will go in automatically electronically.
Q. How will they set this account up?
A. By going into the bank or post office
Q. What sort of identification is needed to set this up?
A. Normally 2 sets of identification, Utility bill.
Q. Can they overdraft with this account?
A. No. but if you open a standard account you could go overdrawn.
Q. What nomination of bank note will be available for claimants?
A. If you use the post office account the full amount will be available for with drawl.
Q. What will be available from the ATM system?
A. £10 is the smallest denomination. But from the bank itself you will be able to with draw the full amount from the branch. Some banks are looking to implement a small overdraft facility where they will be able to with draw £60 though there is only £57 in their accounts.
Q. What will happen to house bound people and people withdrawing their money for them? What happens if the bank refuses to open an account? And what about bank charges?
A. The intention is that with these accounts you will be able to carry out normal banking transactions on day-to-day bases free of charge. Banks and Post offices will allow a person to set up a permanent third party arrangement for them to be able to lift their money. We don't want PIN numbers being given out. The banks will allow an arrangement for a with drawl on the production of a letter.
Q. What % of claimants currently would not have bank accounts? Do you see this as a method of reducing the abuse of order books fraud?
A. We see this as having a huge impact and should eradicate order book and Giro fraud. Our research shows that currently 70% of recipients have a bank or building society account. This figure should increase with this generation growing older and becoming more comfortable with banking. This will also allow us to tackle the problem of financial exclusion. Any banking problems will mean that payments continue to be made by order book or giro.
Q. Is this an opt out scheme as opposed to an opt in scheme?
A. The drive will be for people to join the scheme though they will not be forced to join. The first question on the form will be to name their bank post office building Society Account as opposed to the current question of naming a post office.
Q. Is this a separate account or an existing account that they have?
A. They can nominate either but preference is for them to use their existing account.
Q. When will this be implemented?
A.. Existing customers will be encouraged to make the changeover between 2003 - 2005 there will still be an exception service for the people who don't want to use this system.
Q. What happens when transfers don't occur correctly, or a card is lost?
A. Post Office card account holders will issue a new card. Banks will let you with draw using a withdrawal slip over the counter. Crises Loans etc will still be paid by Giro.
Q. What happens with computer breakdowns and no transfers take place? How are you going to introduce this new scheme?
A. We have contingency arrangements in place for this. Publicity for ACT will commence in March April 2003.