Banks will now be ordered to hand over account information
Fresh powers are being introduced by the DWP to inspect the bank account information of millions of benefit recipients. Under new eligibility verification powers, banks will be required to provide certain data relating to accounts connected to three benefits, including Universal Credit.
These new powers form part of a wider package of measures designed to tackle fraud and error within the benefits system, with new legislation enacted in December 2025. Among the provisions is a new eligibility verification mechanism, whereby officials will contact banking institutions requiring them to look over the accounts they manage that are associated with certain benefits.
The institutions will need to identify any accounts which may be ineligible to receive payments and forward the information to the DWP for further scrutiny. For instance, if you have £16,000 or more in savings or investments, you are ineligible to claim Universal Credit.
In a similar restriction for Pension Credit, for every £500 held in savings above £10,000, this is treated as £1 per week of income. Consequently, this effectively decreases your income top-up component of Pension Credit by £1.
The DWP has previously confirmed that it will not have direct access to individuals’ bank accounts under these new powers. These eligibility checks will initially be applied to examine the circumstances of those receiving Universal Credit, Employment and Support Allowance and Pension Credit.
However, the legislation indicates that this could be extended to other benefits. The powers will begin to be implemented once a consultation period and certain codes of practice for the new measures receive Parliamentary approval.
There will also be a ‘test and learn’ phase for rolling out the powers, to ensure they are applied correctly. Stuart Morris, chief technology officer at compliance technology provider SmartSearch, said this trial phase should focus on “accuracy, proportionality, and public trust”.
Digital identity checks
He said: “The DWP needs to test how effectively eligibility verification systems identify genuine fraud without creating unnecessary false positives.
“This includes validating data against multiple authoritative sources, ensuring digital identity checks are reliable, and confirming that automated processes can distinguish between suspicious activity and legitimate changes in circumstances.”
He said the department’s systems must be capable of detecting document fraud that manual processes wouldn’t typically identify, such as AI-generated bank statements, synthetic identities, or deepfake verification documents. The expert pointed to the need for robust safeguards when accessing people’s data and making decisions about individual cases.
Mr Morris said: “People need reassurance that their information is only being used for its intended purpose, retained for the minimum time necessary, and subject to independent oversight. Trust will be critical to the long-term success of these powers.”
DWP statement
A DWP spokesperson previously said: “We have an obligation to protect public funds, with this legislation set to save the taxpayer £2.1billion over the next five years, part of wider plans that will save £14.6billion. The legislation includes an eligibility verification measure which will require banks to share limited data on claimants who may wrongly be receiving benefits. It does not involve access to benefit claimants’ bank accounts.”
The new legislation also grants DWP officials the authority to withdraw funds directly from an individual’s bank account. This measure will be used when a person owes money to the department and is persistently refusing to repay it.
These measures are intended to help recover funds from people who have left the benefits system. Previously, the DWP could only claw back debts through benefit deductions or from a claimant’s PAYE earnings.
In instances where investigators want to exercise these powers, they will contact the person to provide them with an opportunity to challenge the matter. They will also request a minimum of three months’ worth of bank statements for the account, to confirm that they have the funds available.
The new laws also broaden the authority of benefit fraud investigators to contact individuals and demand information. Previously, they were only permitted to seek details from those on a restricted list. Now they can approach any third party connected to a suspect to demand the information they need.
