The Department for Work and Pensions has introduced new powers enabling banks to get direct access to claimants' bank accounts in a bid to tackle benefit fraud.
The measure forms part of what the UK Government has called "the biggest fraud crackdown in a generation".
The new measure is part of the Public Authorities (Fraud, Error and Recovery) Bill, which the DWP says will save taxpayers £1.5billion over five years.
From 2026, Eligibility Verification measures will allow banks to flag potential benefit fraud without giving the department direct access to claimants' bank accounts.
Under the new system, financial institutions will be permitted to alert the DWP when they identify customers who may have exceeded eligibility thresholds for means-tested benefits, such as the £16,000 savings limit for Universal Credit.
The legislation restricts banks to sharing only limited data and explicitly excludes transaction details, meaning the DWP will not be able to see how benefit recipients spend their money.
The DWP has published 11 new factsheets confirming the Government will implement a "test and learn" approach to ensure the new powers are used proportionally and effectively.
According to guidance on GOV.UK: "The Government will begin implementing the Bill measures from 2026. For the Eligibility Verification Measure, the Government will implement a 'test and learn' approach to ensure the new powers to tackle public sector fraud are being used proportionally and effectively."
The guidance adds: "DWP and the Cabinet Office will continue to work with industry to implement the new measures, consult stakeholders on Codes of Practice and publish guidance."
The factsheets detail safeguards, reporting mechanisms and oversight procedures designed to ensure the "appropriate, proportionate, and effective use of the powers".
The DWP will soon be able to access pensioners' bank accountsGETTYBanks will work with the DWP to identify individuals who may have exceeded eligibility criteria, helping to prevent overpayments and investigate potential fraud cases.
Georgia Gould, Cabinet under secretary said: "While the bill will provide the powers to seek recovery directly through bank accounts and PAYE earnings, these might not always be the most appropriate or effective recovery route."
She added that alternative recovery mechanisms would be pursued when necessary.
Gould continued: "If an individual continues to try to frustrate the process, there are civil penalties through deduction orders of £300.
"If all the powers in the Bill are frustrated, the authorised officers will be able to apply to the courts to seize assets and to use other powers available. There are a number of options to ensure the full recovery of defrauded money to the state."
The Bill is designed to meet the Government’s manifesto pledge to protect taxpayers’ money
PAThe Public Authorities (Fraud, Error, and Recovery) Bill is designed to meet the government’s manifesto pledge to protect taxpayers’ money. The bill will give the DWP new tools to detect and prevent fraud, including:
- New powers of search and seizure to target criminal gangs defrauding the system.
- Authority to recover debts from individuals who are no longer receiving benefits but have avoided repaying what they owe.
- Requirements for banks and building societies to flag potential breaches of eligibility rules, preventing the accumulation of debts.
- Strong safeguards, including reporting mechanisms, to ensure that powers are used appropriately.
The DWP will also establish training programs to ensure staff are prepared to handle these new powers effectively.
The broader fraud crackdown includes several additional measures beyond the Eligibility Verification system. These include driving bans of up to two years for benefit cheats who repeatedly fail to repay money they owe, and new powers enabling the DWP to recover money directly from fraudsters' bank accounts.
The factsheets clarify that financial institutions could face penalties for oversharing information, particularly transaction data
GETTYThe department will also gather information from third-party organisations such as airlines to check if people are claiming benefits from abroad, potentially violating eligibility rules.
The factsheets clarify that financial institutions could face penalties for oversharing information, particularly transaction data.
The DWP will not have direct access to the bank accounts of millions receiving means-tested benefits including Universal Credit, Pension Credit and Employment and Support Allowance.
The department emphasises that the legislation only permits banks to share limited data to help identify those who may have exceeded eligibility criteria, with strong safeguards in place.
Staff will be trained to the highest standards, with clearly defined scope and limitations for using all new powers. The measures include new inspection and reporting mechanisms to ensure appropriate use.
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