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DWP to gain new powers to monitor bank accounts of benefit claimants from 2026

by CBIA Team

Updated January 15, 2026

Feature image — CBIA thanks cottonbro studio for the photo

The Department for Work and Pensions (DWP) is preparing to implement new powers that will allow it to examine bank accounts of individuals receiving certain means-tested benefits, including Pension Credit. These powers, established through the Public Authorities (Fraud, Error and Recovery) Bill, will enable the department to issue "Eligibility Verification Notices" to financial institutions from 2026, with the stated aim of reducing benefit overpayments and fraud.

While the State Pension remains explicitly excluded from these measures, the new framework will initially target Universal Credit, Pension Credit, and Employment and Support Allowance—benefits where the DWP reports the highest rates of incorrect payments. The department estimates the initiative will identify between 50,000 and 100,000 overpayments annually once fully implemented.

Background and Context

The Public Authorities (Fraud, Error and Recovery) Bill represents a significant expansion of government surveillance capabilities in the realm of welfare administration. According to official DWP documentation, the legislation creates a framework for systematic information sharing between financial institutions and government departments. The approach follows recommendations from parliamentary committees on benefit fraud prevention, though privacy advocates have raised concerns about the potential for overreach.

The initiative emerges against a backdrop of increasing scrutiny of welfare expenditure, with the National Audit Office reporting significant losses through fraud and error in the benefits system. However, the specific targeting of pensioners receiving Pension Credit has generated particular debate, as this group represents some of the most financially vulnerable citizens in the UK.

Key Figures and Entities

The DWP will serve as the primary authority overseeing implementation, with banks and other financial institutions required to comply with verification notices. According to the department's guidance, eligible institutions include "banks and building societies, and potentially other financial institutions where benefits are paid."

While some commentators, including financial analyst Neil McCoy-Ward, have suggested the system might use AI to scan spending patterns, official statements maintain that "a human will always be involved in any decision taken afterwards which may affect benefit awards or eligibility." The DWP has emphasized that the verification process will not rely on artificial intelligence for final determinations.

Legal and Financial Mechanisms

The system operates through what the DWP terms "Eligibility Verification Notices," which require financial institutions to cross-reference account details against specific eligibility criteria determined by the department. The official guidance specifies that banks may 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)
Specified details about how the account(s) meets the eligibility indicators

Transaction-level information and specific purchase details are explicitly excluded from permissible disclosures. Financial institutions sharing data beyond these parameters could face penalties. The DWP has clarified that "any information shared through the Eligibility Verification Measure will not be shared on the presumption or suspicion that anyone is guilty of any offence."

International Implications and Policy Response

The development places the UK among several democracies expanding financial surveillance for welfare administration, though the approach differs from Scandinavian models that traditionally emphasize comprehensive data sharing with stronger privacy safeguards. Privacy International has previously warned about the "function creep" potential in such systems, where initial narrow purposes expand over time without additional oversight.

The DWP has indicated that the system will be "gradually rolling out the use of the Eligibility Verification Measure in a test and learn environment" rather than immediate full implementation. Parliamentary oversight remains possible through the requirement that additional benefits can only be added to the system "with the approval of Parliament in future through affirmative regulations," though the State Pension is explicitly protected from inclusion.