Could anyone advise what options are open to advice agencies if a client complains that due to wrong advice given by welfare rights staff they have been overpaid? Client is suggesting agency repays the money. What do other agencies do in these cases?

Would start by dealing with the complaint through your organisation's client complaint procedure- are there any grounds for the client's contention that they have been misadvised?

Does your organisation have a legal department you could approach for advice, or are you a member of any umbrella organisation (such as CAB, FIAC, etc) who could advise you?

Does your organisation have indemnity insurance?

This raises a few questions- How does the client quantify their loss if they have been receiving a benefit or increase of benefit to which they were not entitled? Could they take action? but how would damages be assesed? Not too sure how you can compensate someone for receving too much benefit. There was some good artcles in 'The Adviser' a couple of years ago which dealt with the issue of negligence, wrong advice etc but they mainly focused on situations where a client had been underpaid or not advised to claim a benefit.

As a side issue it isn't generally a good idea to admit/suggest that an organisation has given wrong advice in a public arena (e.g internet) if that client could be identified - this could invalidate your indemnity insurance.