The Department for Work and Pensions (DWP) has published how banks will carry out account checks on those receiving three benefits
New regulations have outlined how banks will need to flag accounts that receive particular benefits to the Department for Work and Pensions (DWP). The new Eligibility Verification Measure will enable the DWP to require banks and other financial institutions to examine accounts receiving Universal Credit, Pension Credit and Employment and Support Allowance (ESA).
Banks will be provided with specified eligibility indicators and required to identify accounts which correspond with them before supplying certain information to the DWP.
The rules do not, however, grant the DWP access to people’s bank accounts or permit officials to observe where benefit claimants are spending their money.
Financial institutions are explicitly prohibited from supplying transaction information in response to an Eligibility Verification Notice (EVN). For money-saving tips, sign up to our Money newsletter here
The final Code of Practice overseeing these new powers has now been published following consultation, clearing the path for the DWP to begin implementing the measure, reports the Daily Record.
How the new DWP bank checks will operate
Under this system, the DWP will issue an EVN to a bank or other financial institution outlining the eligibility indicators it wants accounts assessed against.
The DWP cannot use an EVN to supply a bank with the personal details of individual benefit claimants and request information about them.
Instead, financial institutions will utilise the information they already possess to identify accounts which satisfy the criteria outlined in the notice. When an account is identified, particular information may then be forwarded to the DWP to assist officials in establishing whether a benefit might have been paid incorrectly.
The DWP states the mechanism is intended to detect potential incorrect payments rather than determine whether somebody is entitled to benefits.
An account being highlighted will not automatically indicate someone’s benefit award is wrong or that payments will be stopped.
Child Poverty Action Group (CPAG) said once a claimant has been identified through the measure, the DWP will utilise its existing processes to decide whether further action is required. This could ultimately include changing a benefit decision or suspending payments.
What information banks are permitted to send to the DWP
There are limitations on the information financial institutions may provide under the new powers.
Banks are unable to send the DWP transaction details showing what someone has purchased or where they have spent their money.
The legislation also generally prevents special category data from being shared through the measure, with limited exceptions such as information required to establish someone receives a specified benefit.
The DWP is additionally prohibited from sharing claimants’ personal data with banks when issuing an EVN.
The Code of Practice stipulates information supplied by financial institutions must be transferred securely, with EVNs themselves anticipated primarily to be issued electronically.
What occurs if an account is flagged
A match will not, on its own, be enough for the DWP to decide someone has been overpaid benefits.
Further checks will be required because there may be legitimate reasons why information held by a bank appears inconsistent with benefit eligibility.
For instance, the Code acknowledges someone could appear to hold savings above the normal capital limit while some of that money is legally disregarded when their benefit entitlement is calculated.
DWP staff would consequently need to consider the claimant’s circumstances before making a decision about their award.
The powers form part of the Public Authorities (Fraud, Error and Recovery) Act 2025, which received Royal Assent in December.
The DWP has indicated the broader provisions are designed to tackle fraud and error in the benefits system while incorporating protections governing how information may be obtained and used.
For comprehensive analysis of how the new Eligibility Verification Measure will function, visit the Child Poverty Action Group website to read welfare rights adviser Ruby Sullivan’s complete briefing.
