Martin Lewis has written to the Work and Pensions Secretary with a warning that millions of benefit claimants are being blocked from accessing better banking deals.
The MoneySavingExpert founder said up to 8.3 million people receiving Universal Credit could effectively be prevented from switching bank accounts because of administrative barriers.
Mr Lewis sent the letter to work and pensions secretary Pat McFadden on December 12.
He urged the Government to take swift action to address what he described as a growing problem for claimants.
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Mr Lewis also copied the letter to UK Finance, the Building Societies Association and the Current Account Switch Service.
Speaking on Good Morning Britain on Monday, Mr Lewis said the situation was damaging for consumers and the wider economy.
He said: "Bad for competition, bad for the economy, and bad for consumers."
The MoneySavingExpert said his concerns centre on difficulties faced by Universal Credit claimants when attempting to change their bank details.
He said some claimants are being told they must attend an in-person appointment at a Jobcentre to verify a new bank account.
Mr Lewis said this creates additional costs and inconvenience.
Martin Lewis warned millions of benefit claimants blocked from better banking deals in letter to Work and Pensions Secretary
|PA/GETTY
He said many people on Universal Credit are in work and may have to take unpaid time off to attend appointments, and that it undermines the purpose of the Current Account Switch Service.
The service was designed to allow people to switch accounts quickly and easily.
He said this can cause problems when claimants are asked to provide documentation.
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Mr Lewis said this can cause problems when claimants are asked to provide documentation
| PAIn October, Mr Lewis asked people to share their experiences on social media.
He said the responses highlighted the scale of the issue.
One claimant said they were forced to take unpaid time off work to show a new bank card at a Jobcentre.
The same claimant said they were able to update Child Benefit details online without difficulty.
Another person with mobility issues said they had to attend an in-person interview with identification and a bank card.
They said the process cost them £40 in taxi fares.
The claimant said their anxiety was "through the roof", and that they would not attempt to change banks again.
A wheelchair user said they abandoned the switching process entirely.
They said they were unable to travel to the Jobcentre.
Other respondents said they felt they were being treated like fraudsters.
Some said they were now too frightened to attempt another bank switch.
DWP said they are committed to providing support for claimants
| PAMr Lewis said these experiences demonstrate the need for reform.
He set out a number of proposals in his letter.
Mr Lewis said claimants should be allowed to verify bank changes remotely or by phone.
He said people who have switched accounts through the Current Account Switch Service should be able to upload bank statements and documents online.
Where in-person checks are required, Mr Lewis said there should be greater flexibility.
He said this should include walk-in appointments.
A DWP spokesperson said: "We are committed to ensuring people receive the support they're entitled to, while creating a welfare system that is fair to the taxpayer.
"Personal information such as bank details must be treated securely to ensure payments reach the right person and they are protected from exploitation or impersonation."
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