DWP Gains New Powers to Check Bank Accounts of Benefit Claimants

Under controversial new legislation, the Department for Work and Pensions (DWP) will soon be able to examine bank accounts of millions of benefit claimants, according to government documents. The powers, created through the Public Authorities (Fraud, Error and Recovery) Bill, will be rolled out gradually from 2026 and will initially focus on three specific benefits where incorrect payments are highest.

Background and Context

The new measures form part of the government's strategy to tackle benefit fraud and overpayment errors, which cost billions annually. According to official estimates, the Department for Work and Pensions believes the new verification system will identify between 50,000 and 100,000 overpayments each year once fully implemented. The legislation follows concerns about existing gaps in the system for detecting eligibility changes that might affect benefit entitlement.

Key Figures and Entities

The new powers will apply initially to claimants receiving Universal Credit, Pension Credit, and Employment and Support Allowance. The State Pension is explicitly excluded from these measures and cannot be added through future regulations. The DWP has clarified that "this power can only be used to obtain information on accounts that receive a specified DWP benefit, and any accounts linked to that benefit receiving account if they match the eligibility indicators set by DWP." Civil liberties group Big Brother Watch has criticized the measures as "bank spying powers," raising concerns about privacy implications.

Legal and Financial Mechanisms

Under the new system, banks will be required to respond to "Eligibility Verification Notices" by checking accounts that receive DWP benefit payments against specific criteria set by the Department. The DWP states that banks will only share limited information: "specified details about the account(s) (such as sort code and account number), specified details about the account holder(s) (such as their name(s) and date(s) of birth), and specified details about how the account(s) meets the eligibility indicators." The government has emphasized that transaction information—such as details about purchases—will not be shared, and banks could face penalties for oversharing information. For Universal Credit claimants, the system will flag accounts holding more than £16,000 in savings, unless the capital falls under a specified exception.

International Implications and Policy Response

The implementation of these surveillance powers has sparked debate about the balance between fraud prevention and privacy rights. Similar verification systems exist in other countries, but the UK's approach represents a significant expansion of government access to personal financial data. Privacy advocates argue the measures represent an intrusion into claimants' financial affairs without sufficient safeguards. The government has stressed that "a human will always be involved in any decision taken afterwards which may affect benefit awards or eligibility" and that the rollout will occur gradually in "a test and learn environment." Parliament will have the power to add additional benefits to the system through affirmative regulations in the future, but not the State Pension, which is specifically excluded in the legislation.

Sources

This report draws on Department for Work and Pensions documentation on the Public Authorities (Fraud, Error and Recovery) Bill, official guidance on benefit eligibility criteria, and public statements regarding the implementation timeline of 2026.