New DWP powers to check bank accounts limited to these three pensions and benefits
By Google News Personal Finance ·
Millions of benefit claimants could have information about their bank accounts checked under new Government powers aimed at identifying fraud and incorrect payments.
The Department for Work and Pensions (DWP) will be able to require banks and other financial institutions to check accounts receiving certain benefits against eligibility criteria set by the department.
The powers, introduced through the Public Authorities (Fraud, Error and Recovery) Bill, are due to begin being implemented from 2026.
Initially, the checks will focus on people receiving three benefits:
Other benefits could potentially be added in future with Parliament's approval.
However, the State Pension is specifically excluded from the power.
Under the new system, the DWP will be able to issue what is known as an Eligibility Verification Notice to banks and other financial institutions.
Banks will then be required to check accounts receiving specified DWP benefit payments against particular eligibility indicators provided by the DWP.
If an account meets those indicators, information can be passed to the department for further checks.
The powers can also cover accounts linked to the account receiving the benefit if they meet the relevant eligibility indicators.
This does not necessarily mean a claimant has done anything wrong.
The Government says information passed to the DWP through the system will not be shared on the presumption or suspicion that somebody has committed an offence.
The new powers do not allow banks to routinely hand over people's transaction histories showing what they have bought or where they have spent their money.
Instead, only specified information can be provided in response to an Eligibility Verification Notice.
Financial institutions could face penalties if they provide information beyond what they are permitted to share, including transaction information.
That means the system is designed to identify accounts which may not meet benefit eligibility rules rather than giving the DWP routine access to a claimant's complete spending history.
One example given by the Government concerns Universal Credit.
People will normally not be eligible for Universal Credit if they have more than £16,000 in money, savings and investments, although there are exceptions to the rules.
The new bank-checking powers could therefore help identify cases where financial information appears inconsistent with the eligibility requirements for a benefit.
A bank identifying an account under the new system would not automatically mean the person's benefits would be stopped.
Where further inquiries or an investigation are needed, these will be carried out by the DWP.
The Government says a human will always be involved in decisions which could affect someone's benefit award or eligibility.
It has also stressed that those decisions will not simply be made automatically by artificial intelligence.
The Government says measures contained in the Bill will begin being implemented from 2026.
The DWP plans to introduce the Eligibility Verification Measure gradually using what it describes as a "test and learn" approach.
This is intended to allow the department and financial institutions time to establish how the checks should operate.
Once the scheme is fully rolled out, the DWP estimates the measure could identify between 50,000 and 100,000 benefit overpayments each year.
Originally published by Google News Personal Finance
