The Department for Work and Pensions (DWP) has set out new rules requiring banks and other financial institutions to flag accounts receiving certain benefits, including Universal Credit, Pension Credit and Employment and Support Allowance (ESA).
Under the new Eligibility Verification Measure, the DWP will issue an Eligibility Verification Notice (EVN) to a bank, specifying eligibility indicators. Financial institutions will then check their records to identify accounts that match those criteria and provide specified information to the DWP.
However, the rules do not give the DWP access to people's bank accounts or allow officials to see where benefit claimants are spending their money. Financial institutions are specifically prohibited from providing transaction information in response to an EVN.
How the New DWP Bank Checks Will Work
The DWP cannot use an EVN to provide a bank with the personal details of individual benefit claimants and ask for information about them. Instead, financial institutions will use the information they already hold to identify accounts which meet the criteria set out in the notice.
Where an account is identified, specified information can then be passed to the DWP to help officials determine whether a benefit may have been incorrectly paid. The DWP says the measure is designed to identify potential incorrect payments rather than determine whether somebody is entitled to benefits.
An account being flagged will therefore not automatically mean 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 use its existing processes to decide whether further action is required. This could ultimately include changing a benefit decision or suspending payments.
What Information Can Banks Send to the DWP?
There are restrictions on the information financial institutions can provide under the new powers. Banks cannot send the DWP transaction information showing what someone has bought or where they have spent their money.
The legislation also generally prohibits special category data from being shared through the measure, with limited exceptions such as information needed to establish someone receives a specified benefit. The DWP is also prohibited from sharing claimants' personal data with banks when issuing an EVN.
The Code of Practice states information supplied by financial institutions must be transferred securely, with EVNs themselves expected primarily to be issued electronically.
What Happens 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 example, the Code recognises 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 therefore 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 said the wider measures are intended to tackle fraud and error in the benefits system while including safeguards governing how information can be obtained and used.
