The Local Government and Social Care Ombudsman said Southend-on-Sea Borough Council's actions affected the allowance paid to the complainant, as well as other family foster carers, during the first two years since they were granted a Special Guardianship Order.
The report reveals that the complainant and his wife took responsibility for their two grandchildren after they were taken into care by the council.
Initially, the council paid the grandparents a family foster carer allowance. However, after a Special Guardianship Order (SGO) was made, the council paid them in accordance with its practice at that time, which was to reduce the allowance over a two-year transitional period.
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