Millions of people receiving benefits in the UK could be affected by new bank-checking powers introduced to help the Department for Work and Pensions (DWP) identify potential fraud and incorrect payments. The measures allow banks and other financial institutions to check certain accounts against eligibility criteria set out by the Government.
The changes form part of the Public Authorities (Fraud, Error and Recovery) Act 2025 and are being introduced gradually. The initial focus is on selected accounts associated with Universal Credit, Pension Credit and Employment and Support Allowance.
However, the new powers do not give the DWP unrestricted access to people’s bank accounts or their everyday spending. Instead, financial institutions can be asked to check accounts against specific eligibility indicators and provide limited information when the relevant criteria are met.
For claimants, understanding the difference between an eligibility check and a decision about benefits is important. An account being flagged does not automatically mean someone has committed fraud or will lose their payments. Here is what the new system means, which benefits are covered and how the checks are intended to work.
Changes
The new bank-checking system is designed to help the DWP identify benefit claims that may require further examination. It introduces a process through which financial institutions can check specified accounts against eligibility indicators contained in an Eligibility Verification Notice.
These notices set out the criteria relevant to the benefits covered by the measure. When an account meets an indicator, the financial institution can provide the permitted information to the DWP for further assessment.
The initial rollout focuses on three benefit categories:
- Universal Credit: Financial support for eligible people on low incomes or who need help with living costs.
- Pension Credit: Support for eligible older people on lower incomes.
- Employment and Support Allowance (ESA): Financial support for eligible people whose health conditions or disabilities affect their ability to work.
The precise checks depend on the benefit and the relevant eligibility rules. Information that may warrant further investigation in one case does not necessarily indicate an issue in another.
The Government has said other benefits could potentially be included in the future, subject to the appropriate parliamentary approval. The State Pension is excluded from these particular powers.
This exclusion means that receiving the State Pension alone does not make someone subject to these specific account checks simply because they receive that pension. However, a person receiving the State Pension alongside another benefit should not assume that every account is automatically outside the scope of other applicable rules.
Access
One of the main concerns surrounding the new system is whether the DWP will be able to see how claimants spend their money.
The measure does not provide unrestricted access to online banking or give officials a general view of everyday purchases. Instead, financial institutions check specified accounts against the eligibility indicators in a notice.
Where an account meets the relevant criteria, the information shared can include details such as the account holder’s name, date of birth, account number, sort code and information explaining how the account matched the eligibility indicator.
The permitted information is intended to help the department determine whether further inquiries may be appropriate.
Under the described process, banks are not supposed to provide full bank statements or detailed records of individual transactions. The restrictions are designed to prevent the eligibility-checking mechanism from becoming a general system for monitoring personal spending.
For example, the process is not intended to tell the DWP where someone shops, which products they buy or how much they spend on individual purchases.
Financial institutions must follow the applicable information-sharing requirements. Providing information beyond what the measure permits could result in penalties under the relevant rules.
These restrictions are important because bank accounts contain extensive personal information. Limiting disclosures to specified eligibility checks helps keep the system focused on benefit administration rather than ordinary financial activity.
Savings
The amount of money a claimant holds can be relevant to eligibility for certain means-tested benefits. This is one reason financial information may be useful when the DWP checks whether a claim meets the applicable rules.
Universal Credit generally has an upper capital limit of £16,000. People with capital above that limit will usually not qualify, subject to the programme’s rules and any applicable transitional arrangements.
Capital can include savings and certain other financial assets. However, the treatment of particular funds depends on the circumstances. Some types of capital may be disregarded, and the rules governing individual situations can be more complicated than a single account balance suggests.
For example, money held in an account may need to be assessed in the context of who owns it, where it came from and whether any specific disregard applies. A balance that appears unusual does not necessarily establish that a claimant has exceeded the relevant capital limit.
The new checking process is intended to identify potential discrepancies that may need clarification. It does not automatically determine how all funds should be treated under benefit rules.
Pension Credit has its own rules concerning income and capital. Consequently, information about savings must be considered in the context of the particular benefit rather than applying Universal Credit’s £16,000 threshold to every claimant.
The same principle applies to other eligibility conditions. A financial indicator may prompt further examination, but the department must consider the relevant rules and circumstances before reaching a decision.
Reviews
If an account meets an eligibility indicator, the result is not an automatic finding of fraud. Instead, the information may lead the DWP to examine the claim more closely.
The department may seek additional information from the claimant or review evidence already held on the case. Depending on the circumstances, the claimant might be asked to explain the source of funds, clarify account ownership or provide documents relevant to their entitlement.
The Government has said that decisions about benefit entitlement will not be left to artificial intelligence. Human decision-makers will remain involved when action is considered following an investigation.
This distinction matters because financial data does not always explain the full circumstances behind a transaction or balance. A person may have a legitimate explanation for funds held in an account, or the information may not relate directly to the claimant.
The outcome of a review will depend on the evidence and the rules applying to the benefit. Some cases may result in no change to payments, while others may lead to a correction if the DWP establishes that the benefit was calculated incorrectly.
Claimants who receive a request for information should read it carefully and respond within the stated timeframe. Keeping relevant records can help clarify questions about savings, account ownership or other financial circumstances.
If the DWP makes a decision that a claimant believes is wrong, the person may be able to request a mandatory reconsideration and, where appropriate, appeal under the applicable procedure.
Rollout
The DWP is introducing the measure through a phased approach described as “test and learn”. This allows the department to evaluate how the checks operate before considering a wider implementation.
During this phase, the department can assess the quality of the information supplied by financial institutions, the accuracy of eligibility indicators and the practical effect on case reviews.
Testing is important because an indicator must be useful enough to identify cases that genuinely require attention without creating unnecessary investigations into people whose benefits are correct.
The process also needs to account for complex financial arrangements, including joint accounts and situations in which a person manages money on behalf of someone else.
The legal framework and associated code of practice set out requirements governing the use and handling of information. Independent scrutiny is also intended to provide oversight of how the powers operate.
These safeguards will be important as the system develops. Its effectiveness will depend on the accuracy of the checks, the quality of subsequent investigations and the department’s ability to distinguish genuine eligibility problems from circumstances that require explanation.
Estimates
The Government estimates that the system could help identify between 50,000 and 100,000 cases of benefit overpayment each year once it is fully introduced.
This is a projected outcome, not a confirmed number of cases already identified or payments already recovered. The actual result will depend on the system’s implementation, the accuracy of the information and the findings of subsequent reviews.
Identifying an incorrect payment earlier may help prevent an overpayment from continuing for months or years. It could also reduce the amount of money that later needs to be recovered.
However, the number of accounts flagged will not necessarily equal the number of cases involving incorrect payments. Some indicators may lead to further checks that establish the claimant remains eligible.
The distinction is central to understanding the purpose of the measure. A flag is an indication that further examination may be appropriate, rather than a conclusion that the claimant has acted improperly.
Protection
For people receiving benefits, the new powers raise practical questions about privacy, eligibility and what to do if the DWP requests further information.
The main point is that the system is intended to check specified accounts against particular eligibility criteria. It is not a general authorisation for the department to monitor every purchase or routinely inspect everyone’s day-to-day transactions.
Claimants should continue to report relevant changes in circumstances in accordance with the rules of their benefit. They should also retain records that may help explain their financial position if questions arise.
Anyone contacted by the DWP should verify that the communication is genuine before sharing personal information. If uncertain, they can contact the department through its official channels rather than relying solely on contact details in an unexpected message.
The new bank-checking powers represent a change in how the DWP can identify possible errors, but they do not remove the need for individual assessment. The initial rollout will help show how effectively the system identifies potential overpayments while respecting the legal limits on information sharing.
For claimants, the key distinction remains straightforward: an eligibility indicator can lead to further questions, but it does not automatically mean benefits will stop or that fraud has occurred. Any action should depend on the evidence and the rules governing the individual claim.
FAQs
Can the DWP check bank accounts under the new powers?
Yes, specified accounts can be checked against eligibility indicators.
Which benefits are initially covered?
Selected accounts linked to Universal Credit, Pension Credit and ESA are covered.
Is the State Pension included in these checks?
No, the State Pension is excluded from these specific powers.
Can the DWP see every purchase I make?
The measure does not permit unrestricted access to everyday spending records.
