DWP claimants on eight benefits to get bank accounts checked under new crackdown

People on benefits could have their bank accounts scrutinised under new powers set to come into force for Department for Work and Pensions (DWP) agents.

The regulations would see DWP staff able to monitor people’sfinancial transactionsmore closely in an effort to tackle fraud and prevent overpayment of benefits.

The Public Authorities (Fraud Error and Recovery) Bill, is due to come into force in 2026, with the full roll out expected to finish between 2029 and 2031.

The new rules will see the DWP granted increased authority to investigate, prevent, and reclaim funds owed to taxpayersin an attempt to crack down on social security fraud and errors.

Rather than snooping directly on all claimants’ bank accounts, the rules will give banks the ability to report accounts that may indicate eligibility issues for benefits.

READ MORE: 'Married men are obsessed with me – I'm paid thousands just to speak to them'

READ MORE: Exact amount your state pension could increase by next year revealed

For example if a person is claiming Universal Credit, which has a £16,000 income cap, but their account has more than this amount in it.

The plan is to utilise algorithms to identify potential fraud and allow certain debts to be deducted directly from accounts without the need for a court order. The move has raised concerns over privacy and the protection of vulnerable people.

The Manchester Evening News reports that alerts from banks could prompt DWP investigations and potential fraud recovery actions. Currently the DWP can request someone's bank transaction information if they have reasonable grounds to suspect fraud. The new powers would allow banks to flag suspicious accounts, bringing them to the notice of government investigators.

Officials have said only minimal information will be shared by banks about an individual’s account, unless a warning signal is triggered. Should an account be marked, the DWP might then launch a more comprehensive inquiry.

The DWP will send banks Eligibility Verification Notices, setting out particular "eligibility indicators" they must check against accounts receiving DWP benefits. Banks will need to examine the information they possess on these accounts and compare it with the outlined indicators.

The government has said it plans to adopt a gradual, test-and-learn approach from 2026 to ensure the powers are used effectively. Officials have said the checks are expected to save around £940 million over the next five years by cutting losses from fraud and mistakes.

Which benefits might be affected?

People on means-tested benefits are likely to be impacted by the move, as these depend on income or savings. Means-tested benefits, designed to help those most in need, require your income to be below a certain threshold to receive them. People getting these benefits might get their account flagged if their financial activity suggests they might have more money than they told the DWP about.

• Universal Credit: A payment intended for individuals with low income or those out of work.
• Housing Benefit: Aid with rent payments for households with low income.
• Income Support: Financial help for those on a low income.
• Income-based Jobseeker's Allowance (JSA): Aimed at people looking for work.
• Income-related Employment and Support Allowance (ESA): For those unable to work due to illness or disability.
• Council Tax Support (or Reduction): Help with local council tax payments for low-income earners.
• Tax Credits (Working Tax Credit and Child Tax Credit): Financial assistance for working families and those with children, although Universal Credit is now replacing this for most people.
• Pension Credit: Available for individuals over the State Pension age to supplement their income if they have limited savings and earnings.

A statement on Gov.uk reads: "The National Audit Office report 'An Overview of the impact of fraud and error on public funds for the new Parliament 2023 to 2024' supports the use of data to detect and prevent fraud and error.

"DWP wants to better harness and use data to detect and prevent fraud and error in the social security system and correct it more quickly, preventing debt from accruing.

"To do this, DWP will require banks and other financial institutions to examine their own datasets and provide data to help identify where someone may not be meeting the specific eligibility criteria of a benefit through issuing 'Eligibility Verification Notices'.

"DWP will then use the information received, along with other information held on the claimant, to determine whether further inquiry is needed.

"This will mean that claimants are paid more accurately, more errors are found and resolved, and any suspected fraud can be identified and investigated sooner."