The Public Sector Fraud and Error (Recovery) Regulations 2026

These Regulations may be cited as the Public Sector Fraud and Error (Recovery) Regulations 2026.

These Regulations come into force on 14th July 2026.

These Regulations extend to England and Wales.

Where the Minister^f1 sends a relevant document to a bank, the document may be sent using either or both of the following methods—

Where the Minister sends a relevant document to a person other than a bank, the document may be sent using either or both of the following methods—

Where a bank or other person sends a relevant document or any information to the Minister, the document or information may be sent by either or both of the following methods—

For the purposes of paragraph (3)—

as specified in the direct deduction order^f2, notice or notification to which the relevant document or information relates.

Any relevant document or information—

If any relevant document or information is sent after 5.00pm on a working day^f3 or at any time on a non-working day, paragraph (5) should be read as though it was sent on the next working day.

In this regulation—

• “relevant document” means—

  1. (a)

     in relation to the Minister—

     1. (i)

        a direct deduction order,

     2. (ii)

        a notice or notification under any of the relevant provisions, or

     3. (iii)

        a copy of any such order, notice or notification, and

  2. (b)

     in relation to a bank or other person, any notice, notification, information or application under any of the relevant provisions;

• “relevant provisions” means sections 17 to 37 of the Act.

In this regulation, representations means information and evidence given to the Minister by an account holder, having been invited to do so, in accordance with sections 21 (2), 28 (2) and 29 (3) of the Act.

The account holder must include within the representations all information or evidence which the account holder wishes the Minister to consider when deciding whether to make or vary the direct deduction order.

The account holder must make the representations—

This regulation applies where an account holder applies to the Minister to vary a direct deduction order, in accordance with section 28 (1) of the Act.

An application to vary a direct deduction order must—

This regulation applies where an account holder applies to the Minister for a review of a direct deduction order under section 34(2) of the Act.

An application for a review must—

The amounts taken into account in calculating the amounts credited to an account for the purposes of section 22 (3) of the Act (total amount of deductions) must not include—

In this regulation, “payroll costs” means costs incurred in connection with the employment of a person by the liable person or any other account holder, including—

For the purpose of this regulation, an amount is payable to a person by way of remuneration if it is—

The amount to be deducted under a regular direct deduction order^f1 from a personal account must not exceed—

Where any amount calculated under paragraph (1) includes a fraction of a penny, it is to be rounded to the nearest whole penny with a result of exactly half a penny being rounded down to the nearest whole penny.

Where a bank is required to give information to the Minister under an account information notice^f1, a general information notice^f2 or a further information notice^f3 (“relevant information”), the bank must provide the relevant information within the period of 10 working days beginning with the day on which the notice is given to the bank.

Where a bank is required to give the Minister the name and correspondence address that it holds for a deputy under section 37 (5) of the Act, the bank must give the Minister that information within the period of 10 working days beginning with the day on which the notice or order referred to in section 37 (4) of the Act is given to the bank.

If a bank is unable to provide the information mentioned in paragraph (1) or (2) within the period specified in the relevant paragraph—

Subject to paragraph (5), if a bank is unable to comply with—

the bank must notify the Minister of that inability and the reason for the inability within the period of 10 working days beginning with the day on which the bank became aware of it.

Paragraph (4) does not apply where the inability is an inability to provide the information mentioned in paragraph (1) or (2).

Where a bank is notified of a suspension to the requirement to make deductions and payments under a regular direct deduction order or the revocation of a direct deduction order, the bank must ensure that no further deductions are made under that order after the expiry of the period of 2 working days after the day on which the bank is so notified.

Where a bank is given a notice to re-start deductions under a regular direct deduction order, the next deduction must be made—

Where a bank is required to give statements to the Minister under an account information notice—

the account has been closed, is in the process of being closed, or an account holder has requested its closure,

the account has been transferred to another bank, is in the process of being transferred to another bank, or an account holder has requested its transfer to another bank,

the liable person stated on the notice is not a holder of the account,

a process has begun to remove the liable person as a holder of the account;

the bank has reason to believe the account is held by the liable person on trust for another person (unless that other person is also stated to be a liable person on the notice), or

the bank knows the account is subject to a requirement under any other enactment or by an order of any court which would prevent the bank from making deductions from it.

Where a bank is required to take an action under section 26 (1) of the Act (restrictions on accounts), the bank must notify the Minister, within the period of 7 working days beginning with the day on which the pre-deduction notice or lump sum direct deduction order^f1 is given, of—

Where a restriction has been placed on an amount in an account and—

the bank must remove the restriction within the period of 2 working days beginning with the day on which the notice of a decision not to make a direct deduction order was given or the direct deduction order was revoked.

Where a restriction has been placed on an amount and—

the bank must remove the restriction which was placed on any amount exceeding the amount to which the direct deduction order mentioned in sub-paragraph (a) or varied order mentioned in sub-paragraph (b) relates within the period of 2 working days beginning with the day on which the direct deduction order is given or varied.

Where a restriction is removed, the bank must notify the Minister of the removal of that restriction within the period of 2 working days beginning with the day on which the restriction is removed.

For the purposes of this regulation, a restriction is placed on an amount in an account if action is taken under section 26 (1) of the Act in respect of that account and that amount.

Amounts deducted by a bank under a direct deduction order must be paid to the Minister within—

In this regulation, the “relevant period” means the period which—

If an appeal is brought under section 35 of the Act, the relevant period ends at the time at which—

The payment must be made by—

The payment must not be a consolidation or aggregate of multiple deductions taken by the bank, except where all the deductions were made in respect of the same direct deduction order.

The bank must identify each payment by including the unique reference stated in the direct deduction order.

Provision included in a direct deduction order under section 24 (1) of the Act (bank’s administrative costs) may not enable a bank to deduct more from the amount standing to the credit of the account specified in the order than the amount specified in paragraph (2).

In the case of a regular direct deduction order, the amount is the lesser of—

In relation to a deduction made under a lump sum direct deduction order, the amount is the lesser of—

Paragraphs (2) to (5) apply where a third party debt order provides for deductions to be made from the same account as that specified in a regular direct deduction order.

Where—

the bank must not make payment pursuant to the direct deduction order before payment is made pursuant to the third party debt order.

Where a direct deduction order is served after an interim third party debt order the bank must not make payment pursuant to the direct deduction order before action is taken to comply with the interim third party debt order.

Where payment is made pursuant to a regular direct deduction order before the payment under the third party debt order is made, the bank must not make further deductions under the direct deduction order before taking action to comply with the third party debt order.

Where a decision under section 32 of the Act to re-start a direct deduction order takes effect on the same day as or any day after a third party debt order has been served, the bank must not make payment under the direct deduction order before—

payment is made pursuant to, or

in the case of an interim third party debt order, action is taken to comply with,

Subject to paragraph (2), “earnings” for the purpose of deduction from earnings orders^f1, are any sums payable to a person—

“Earnings” does not include—

Except where section 42 (4) of the Act applies, the amount to be deducted must not exceed—

Where section 42 (4) of the Act applies, the amount to be deducted must not exceed—

Where any amount calculated under paragraph (1) or (2) includes a fraction of a penny, it is to be rounded to the nearest whole penny with a result of exactly half a penny being rounded down to the nearest whole penny.

Where the deduction from earnings order specifies an amount, or a method of calculating an amount, that may be deducted from the liable person’s earnings for the purpose of meeting costs reasonably incurred by the employer in complying with the order—

Where, on any pay-day (“the relevant pay-day”), the employer fails to deduct an amount from the liable person’s earnings or deducts an amount less than the amount which should have been deducted from the liable person’s earnings, the employer must, on the next available pay-day or pay-days, first deduct the amount required to be deducted under the order for that pay-day, subject to paragraphs (1) and (2), and then the difference between the amount, if any, which was deducted on the relevant pay-day and the amount which should have been deducted on that pay-day.

In this regulation, “pay-day” means a day on which a person is paid.

The Minister must from time to time—

The first report must be published before the end of the period of 5 years beginning with the commencement date.

Subsequent reports must be published at intervals not exceeding 5 years.

Each report must in particular—

In this regulation, “regulatory provision” has the same meaning as in sections 28 to 32 of the Small Business, Enterprise and Employment Act 2015 (see section 32 of that Act)^f1.