DWP says bank account monitoring test found 60,000 benefit claimants were breaching rules

DWP says bank account monitoring test found 60,000 benefit claimants were breaching rules
Rishi Sunak unveils plans for welfare reform
Jessica Sheldon

By Jessica Sheldon

Published: 19/05/2024

- 14:14

Updated: 19/05/2024

- 14:57

The DWP has asked two high street banks to share internal data

The DWP says tens of thousands of benefit recipients were found breaching the rules in a test of the DWP's plans to monitor people's bank accounts.

The Government is seeking to introduce legislation which will compel third parties - such as banks and building societies - to share information with the DWP.

In its pursuit to "tackle fraud and error against the benefit system", the department asked two unnamed banks to use internal data to identify accounts receiving specified types of benefit payments and matching the risk criteria provided by the DWP for capital and abroad entitlement rules.

It meant identifying accounts receiving a means-tested benefit with savings exceeding the capital limits and/or being accessed abroad for more than consecutive weeks.

One of the banks found more than 60,000 benefit claimants were breaching the rules, according to a report published in September 2023.

For the months of July, August and September 2022, it found 713,000 accounts were in receipt of Universal Credit, Pension Credit and Employment & Support Allowance (ESA).

Among them, around 60,000 accounts were in risk of breaching the capital rule (eight per cent).

The average monthly balance for these accounts was £50,000, and around half of them were joint accounts.

The unnamed bank also found 3,000 accounts in risk of breaching the abroad rule (less than one per cent).

Another pilot in 2017, requested by the DWP, examined a limited sample of cases containing personal information.

It resulted in 549 bank accounts being reported by the bank to the DWP as Suspicious Activity Reports (SARs) under the Proceeds of Crime Act 2002.

Of these, 176 cases (32 per cent) were related to the capital eligibility rule, while 58 (11 per cent) were related to the abroad eligibility rule.

However, the sample of cases reviewed in the 2017 test were derived from suspicious activity reports rather than being random, meaning it's likely the rates are higher than a randomly selected sample.

The DWP report said: "The above results of the small-scale tests with two banks and building societies indicate a strong potential for the use of banking data to identify possible capital and abroad fraud and error across a range of means-tested benefits."

Currently, the DWP can only request details of a bank account holder's transactions if there are reasonable grounds to suspect them of fraud.

However, the Data Protection and Information Bill, currently at the report stage in the House of Lords, would give the department new powers to monitor the financial activity of benefit claimants.

The DWP could require data from third parties, such as banks and financial organisations, if the legislation came into force.


Calculator and magnifying glass

The DWP could require data from third parties such as banks and financial organisations if the legislation came into effect


The UK Government says it would help reduce benefit fraud and save the taxpayer up to £600million over the next five years.

However, civil liberties campaign group Big Brother Watch (BBW) has warned that the potential for “expansive surveillance, high rates of error, and disproportionate impact on people in vulnerable positions is huge”.

Disability Rights UK warned there are concerns the new powers would also see disabled people with care and support needs wrongly trigger fraud indicators, potentially leading to their benefits being suspended and being forced into intrusive interviews by DWP fraud investigators.

The organisation pointed out many disabled people set up bank accounts to pay for their social care, and these accounts hold capital which could be misidentified as fraudulent.

A DWP spokesperson said: “This is an information-gathering power. It is not a surveillance power or an investigatory power.

“It requires third parties to look within their own data and provide minimal, relevant information to DWP only where this may signal that a claimant does not meet the eligibility criteria for the benefit they are receiving. DWP will not receive any data on the vast majority of claimants who comply with rules around benefit entitlements.

“We have a duty to treat taxpayers’ money responsibly – which is why we are cracking down on fraud and error. This is backed up by our £900 million Fraud Plan, which will bolster our counter-fraud operations and root out those who steal from the most vulnerable.”

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