The DWP has published new guidance
The Department for Work and Pensions (DWP) has issued guidance setting out what banks and financial institutions could be required to monitor under new benefit Eligibility Verification powers.
The new system is part of the UK Government’s broader clampdown on fraud and error within the welfare system and will initially cover people receiving Universal Credit, Pension Credit and Employment and Support Allowance (ESA). Through the Eligibility Verification Measure (EVM), banks could be compelled to scrutinise accounts where certain DWP benefits are paid and flag cases where accounts display particular “eligibility indicators” connected to benefit regulations.
The DWP stated the checks are intended to help detect incorrect payments resulting from fraud, claimant error or official error, while also preventing individuals from accruing substantial overpayments that subsequently need to be recovered.
According to the new Code of Practice on Eligibility Verification Notices, banks may be instructed to highlight accounts where savings surpass benefit thresholds, reports the Daily Record.
For Universal Credit, this might involve accounts containing more than £16,000, which represents the maximum capital limit for the benefit.
The guidance also indicates the DWP could request information associated with indicators that a claimant has remained abroad longer than benefit rules typically permit.
Nevertheless, the DWP emphasised there are stringent legal restrictions on what banks are able to share. The Code stipulates that financial institutions are forbidden from disclosing transaction details, which means the DWP is unable to view what people are purchasing, where they shop or their individual spending patterns.
Banks are equally prohibited from sharing “special category data”, which encompasses details relating to political views, religious beliefs, ethnicity or health records.
The guidance states: “DWP is prohibited by law from sharing personal data with financial institutions under this power, and from requesting transaction information and special category data.”
What banks cannot share
The document further clarifies that the DWP is not permitted to instruct banks to search for named benefit claimants.
The code also repeatedly emphasises that strict limitations govern the information banks are able to provide.
The DWP confirmed that financial institutions are legally prohibited from sharing:
- transaction histories
- spending information
- financial statements
- special category data such as political opinions, religion or ethnicity
Rather than this, financial institutions would apply eligibility criteria across their own internal systems, returning only restricted information where accounts satisfy the indicators outlined in an Eligibility Verification Notice (EVN).
The information that may be passed on to the DWP includes account details, names and dates of birth associated with accounts, and particulars demonstrating how an account met the eligibility indicator.
Examples might include confirmation that savings surpassed a specified threshold or evidence that an account had been regularly used outside the UK.
The DWP emphasised that information returned by banks does not automatically indicate that an individual has acted improperly. The Code states: “No decisions about benefit entitlement will be made automatically on this information alone.”
Instead, the DWP must examine the information alongside existing evidence already held on a claim before determining whether further investigations are required.
The guidance also confirms that a “Test and Learn” rollout phase will take place, initially involving a limited number of financial institutions prior to any wider expansion.
Throughout this period, the DWP has said it will evaluate how effectively the system functions, how reliable the data proves to be, and whether the safeguards are working as intended before any broader implementation takes place. The DWP estimates that benefit fraud and error led to £9.6 billion in overpayments during the 2025/26 financial year.
