Developments in using Prepaid Cards for Direct Payments

1. Developments in using Prepaid Cards for Direct Payments The National Prepaid Cards Network Colin Whitehouse Chair – National Prepaid Cards Network colin.whitehouse@prepaidnetwork.org.uk

2. National Prepaid Cards Network • Independent network created in 2011 • Over 850 local authority, central gov’t and health sector members • Assesses sector requirements and captures best practice • shares best practice, issues and problems for mutual benefit • acts as an interface between the public sector and the suppliers • Membership, events, support and website are free of charge to the public sector • www.prepaidnetwork.org.uk • The Members Only area contains documents submitted by local authorities, access is restricted to public sector members and network organisations • It’s all free!

3. Prepaid Cards in the Public Sector • At the end of August 2018; • Prepaid Cards are being used by 130 UK Councils • …and over 20 Clinical Commissioning Groups • …and by Police, Charities and Social Enterprises • Many councils are now using prepaid cards in multiple service areas • almost always starting with adults and children’s services direct payments • Councils and CCG’s have uploaded £312m onto prepaid cards so far this year • Overall public sector upload expected to be near £1bn this year

4. Most popular applications • Adults direct payments • Authorities report savings of between 5% and 10% of their DP budgets by using prepaid cards • Appointeeships / Court of Protection • Children’s services • Fostering, respite care, young people leaving care etc. • Asylum seekers / no recourse • Personal Health Budgets • Cash replacement • Some authorities are cashless, using prepaid cards to replace cash in all departments • Emergencies / instant issue

5. Advantages to local authorities • Solves the problem of council funds being held in service users’ own bank A/C’s • Much easier proportional monitoring of spend • daily alerts and real time spend information • It’s easy to claw back funds when necessary • Spend can easily be monitored against the care plan • and data used during service user meetings and reviews • Improves authorities’ safeguarding capability • Automates the audit trail • Generates excellent management information • The prepaid card is the property of the council • Replaces cash handling - cheaper, faster, safer and more secure • Tighter integration between finance and front line social work

6. Advantages to service users • Prepaid cards are generally available to all, regardless of financial circumstances • many potential benefits to those financially excluded (20% of pop.) • Removes the considerable worry of providing paperwork • Access to better services and lower online prices (15% lower) • Promotion of life skills / social inclusion • Early notification of probable direct debit failure • No need to carry and manage cash • Can’t go overdrawn and incur costs • Can more easily track spend and manage their own finances • Improved and more timely safeguarding • ….there is overwhelming evidence that service users like using prepaid cards….

7. Some examples...there are many more • A NE unitary authority can now produce a financial audit in seven minutes and they are used in ALL annual reviews • A County Council saved £7.5m in the first year of using prepaid cards with no impact on service delivery • Another saved over £1.5m by carrying out a high balances exercise with no impact on service delivery • Two unitary authorities have integrated prepaid cards with their financial systems and care systems and now have full operational dashboards showing their position at all times • A city council has produced seven case studies illustrating how prepaid cards have directly improved the lives of appointees • A London borough uses prepaid cards in all 14 departments and has closed all of its cash offices

8. ………case study excerpts……….

10. What is a high balance? • Card account data enables us to see which accounts are running high and which a running low • Xxx pays four weeks in advance, anything below 4 weeks is a low balance • A high balance for managed accounts is 8 weeks • A high balance for client managed accounts is 12 weeks • The report flags accounts that need to be investigated for potential underspend, overspend, safeguarding, non payment of client contribution, need for a review

11. The high balance project Once the report which showed the number of weeks in accounts was being used it was clear to see the large number of clients with high balances:

12. The high balance project • At the start of the project it was identified that there was approx. £1.3 million in the accounts that was above 8 to 12 weeks • It was quickly agreed that a project officer would be appointed on a one year contract to recall the excess funds. They have also been tasked with stablishing how to move forward with high balances to ensure this falls into business as usual.

13. The high balance project to date….. • £787k has been recalled across 207 accounts, leaving 8/12 week’s balance + extra where required • £846k excess still sits in 201 accounts • As it stands we are looking to recall over £1.6m across all 408 accounts (allowing for exceptional cases) • All accounts that have had a recall have been referred for review • If the account continues to accumulate a high balance again after a 2 month follow-up it’s reviewed again • 20% of accounts get reviewed, altered and then subsequently undergo a second review

14. Appointeeships Pilot • Pilot for 12 months as council wide project to test the application and functionality of prepaid cards • Immediate benefits for Xxx • Removal of cash and cheques to pay for everyday items • Removal of security risk involved in moving cash around the city • Increased availability of team due to them not having to trek across the city • Immediate benefits for the customer • Immediate access to funds (no longer has to request funds in advance) • Freedom to obtain cash on demand • Improves customer wellbeing – customer able to have input into management of their day to day finances

15. Appointeeships Functionality What do you expect from a prepaid card account? • ATM facilities • Online access • EPOS • Faster Payments • Standing Orders • Direct Debits • Easy to load – faster payments from the council are in the card account within minutes (great for emergencies) • 24/7 access • Easy to monitor – full access to all accounts • Daily reporting

16. Usage • Currently 113 active accounts for appointees/deputyship (73% of cases have a prepaid card) • Loaded £110k in 12 months – 3000 card load transactions per annum. Load value and volume predicted to increase by 20% year on year. • 5000+ customer transactions per annum

17. Appointeeships - Prepaid Account Use • In Xxx we keep customer funds in a separate bank account and use the prepaid card to facilitate the purchase of everyday expenditure. Xxx passes all of the costs for the account to the customer • Support agencies used by the council must have a money management policy. Monitoring and access to RTI (real time information) make the accounts as secure as they can be • Some authorities use the prepaid account exclusively to manage finances under appointeeship.

18. Some recent trends we’re seeing…. • Individual Service Funds are slowly becoming more popular • Self-employed PA’s cause difficulties and authorities don’t always know where to draw the line on helping service users • There a slight but growing shift back to paying DP’s gross rather than net and invoicing for the contribution • Third party managed accounts providers are variable, smaller ones can be flexible, larger ones tend not to be. Trust is often an issue. Money management policies can be scarce. • All prepaid cards will soon have the facility to be contactless, but this can be switched off by the authority • Some ‘slower to act’ authorities are suddenly moving more quickly on prepaid cards

19. Final thoughts • There are currently two prepaid card framework contracts available to all UK public sector organisations • It’s possible to be up and running within 4-6 weeks of signing a contract • The funding authority remains in total control of its finances and fits prepaid cards around how they want to operate • Members identify service user resistance as the biggest red herring • The network provides a safe forum to get started, no-one is going to do anything that hasn’t already been done by other network members • This isn’t new or risky, a small and shrinking minority is not taking advantage of the opportunities provided

20. Questions?