224.Early attempts to implement interest charges on arrears of child support maintenance were abandoned from April 1995. The calculations were complex and difficult to explain to clients. An alternative provision to interest was introduced by the Child Support Act 1995 but did not come into force. Neither of these provisions will have effect in the new scheme.
225.Instead, a simpler, discretionary financial penalty will be introduced. The intention is for the Secretary of State to have discretion to impose a financial penalty of up to 25 per cent of the amount owed. This will be levied for each week in which payment was not made, but will not be compounded. The charge will not be child support maintenance but will be an administrative penalty payable to the Department of Social Security in recognition of the additional work involved in pursuing late or non-payment and will be paid into the Consolidated Fund.
226.It is intended that the penalty will not be imposed if a missed payment is paid within a reasonable period, or the payment was missed for good reason, such as sickness, or acceptable arrangements are made to pay the missing amount and to continue to pay over an agreed period.
227.It is envisaged that the penalty will rarely need to be applied, but that it will provide a useful incentive for persuading non-resident parents to meet their responsibilities.
228.This section makes an amendment to section 41 and replaces section 41A of the 1991 Act. It removes the provisions on charging interest and inserts new provisions for financial penalties to be charged.
229.Subsection (1) amends section 41 of the 1991 Act to remove the charging of interest on arrears. Transitional provisions will allow the Secretary of State to continue to collect and enforce interest charges already imposed.
230.Subsection (2) substitutes section 41A of the 1991 Act with a new provision on financial penalties.
Part 1: Child Support. Commentary on Sections Financial penalties Section 18: Financial Penalties