By Charlotte Smith

Copyright dailyrecord

The Department for Work and Pensions (DWP) is set to gain new powers to scrutinise the bank accounts of benefit claimants. The proposed regulations would allow the DWP to monitor financial transactions more closely in an effort to tackle fraud and prevent overpayment of benefits. These new powers are due to be introduced starting from April 2026 under the Public Authorities (Fraud Error and Recovery) Bill , with a full rollout expected to be completed between 2029 and 2031. This legislation will enhance the DWP’s ability to combat social security fraud and errors by granting the department increased authority to investigate, prevent, and reclaim funds owed to taxpayers. Rather than conducting a direct check on all benefit claimants’ bank accounts, banks will be able to report accounts that may indicate eligibility issues for benefits. 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. While this update aims to expedite debt recovery and catch more fraudulent activity, it has raised concerns about privacy and the protection of vulnerable people. Under the DWP’s Eligibility Verification Measure, banks will be required to flag accounts that exceed benefit limits, such as the £16,000 income cap for Universal Credit. The Manchester Evening News reports that this could prompt DWP investigations and potential fraud recovery actions. These inspections aim to tackle fraud and mistakes by identifying potential overpayments before they happen. They’re also meant to reduce fraud and guarantee precise payments. The focus is on safeguarding taxpayer money and ensuring only eligible individuals receive benefits. Protection measures are anticipated to be implemented, and a “test and learn” strategy will be adopted to ensure the fair and effective use of these powers. Currently, the DWP can only request someone’s bank transaction information if they have reasonable grounds to suspect fraud. However, new legislation could transform this entirely. The DWP has said it won’t be snooping into everyone’s daily purchases. Instead, banks will be asked to flag accounts suggesting a person may no longer be entitled to benefits. Only minimal information will be shared 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 plans to adopt a gradual, test-and-learn approach from 2026 to ensure the powers are used effectively. These checks aim to identify potential claimants who may have exceeded eligibility criteria for means-tested benefits, such as income or capital thresholds. This change is likely to impact those on means-tested benefits, which depend on income and savings. If anyone receiving these benefits exhibits financial activity that appears inconsistent with the eligibility criteria, their account could be flagged. Means-tested benefits are government financial support schemes that work out eligibility and payment amounts based on your income and available assets (like savings and investments). If your income and assets are below a certain threshold, you could qualify for these benefits, which are designed to help those most in need. The main aim is to cut benefit fraud and stop overpayments that happen when people fail to report changes in their financial situation. By getting banks to highlight suspicious accounts, the DWP can check benefit eligibility more effectively and ensure payments reach those genuinely entitled. The checks are expected to save around £940 million over the next five years by cutting losses from fraud and mistakes. 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.”