The Department for Work and Pensions (DWP) has published the final Code of Practice governing new powers that will allow banks to flag accounts receiving Universal Credit, Pension Credit and Employment and Support Allowance (ESA) for potential incorrect payments.
The system, introduced under the Eligibility Verification Measure, requires banks to identify accounts matching specified criteria. Financial institutions are prohibited from providing transaction information showing what claimants have bought or where they have spent money. The DWP cannot access personal bank account details or share claimants' data with banks.
How the flagged account system works
Banks will flag accounts to the DWP, but the department will use its existing processes to decide whether further action is required. This could include changing benefit decisions or suspending payments.
An account being flagged will not automatically mean someone's benefit award is wrong or that payments will stop. Further checks are required as there may be legitimate reasons for apparent inconsistencies.
Legal basis and safeguards
The powers form part of the Public Authorities (Fraud, Error and Recovery) Act 2025, which received Royal Assent in December. The DWP said the measures aim to tackle fraud and error whilst including safeguards for information use.
The Child Poverty Action Group said once a claimant is identified, "the DWP will use its existing processes to decide whether further action is required."
