
Bedford Borough Council applied for a Special Guardianship Order (SGO) on behalf of a couple fostering two young siblings in 2014.
Under the arrangement, the family understood it would continue to receive the allowance rate they had received as foster carers.
However, in 2016 the council applied a means test to the couple, reduced the allowance and insisted they claim welfare benefits.
The ombudsman ruled that the council had failed to explain the financial implications of changing status from foster carers to special guardians.
He also criticised the local authority for not consulting on versions of the support plan, for reducing allowances contrary to the support plan and for poorly explaining its decisions and keeping records.
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