The Department for Work and Pensions (DWP) will use new powers under the Public Authorities (Fraud, Error and Recovery) Act to run automated checks on bank accounts and reduce benefit fraud. From October, major UK banks and financial institutions will be required to scan accounts receiving benefits like Universal Credit, Pension Credit, and ESA against specific risk indicators.
Red flags identified by CPAG
The Child Poverty Action Group (CPAG) has explained what it thinks the main red flags will be, although the DWP has not confirmed them publicly. The system means banks have to flag up suspicious activity or if the person may be infringing rules. Specifically, this relates to savings and long foreign holidays.
CPAG said: “We do know they will be based on the eligibility criteria for the relevant benefits and it seems the DWP intends to use this measure initially to identify accounts that might be over capital limits or held by those who have spent time abroad beyond the periods allowed under temporary absence rules. The indicator might be all accounts, either stand-alone or when combined with others held by the same person, receiving UC with a balance of over £16,000.”
Savings and holiday checks
The DWP code of practice said information may be flagged up when, for example, a person has £16,000 in savings when the rule is they can’t get Universal Credit with that in the bank. It added: “It may be that DWP lowers this amount to help verify the correctness of payments where a claimant has between the lower capital limit of £6,000 and the upper capital limit of £16,000.”
For those abroad, the DWP said: “For those abroad, the Code of Practice suggests evidence that someone has been abroad for too long could be in the form of ‘dates that the account has been consecutively used outside of the UK’. Therefore, a potential eligibility indicator could involve identifying accounts with consecutive transactions abroad for more than one month.”
Enforcement and impact
Enforcement of the powers will be gradually rolled out from October 2026, giving debtors a final window to pay back the cash or sort out an affordable repayment plan before that deadline. Under the Public Authorities (Fraud, Error and Recovery) Act 2025, the DWP said it can now go directly to a person’s bank to claw back cash owed, without needing a court order. In the most serious cases, it can ask a court to strip persistent dodgers of their driving licence.
Work and Pensions Minister for Transformation Andrew Western said: “Hardworking taxpayers deserve a system that pursues those who deliberately dodge their debts, and that is exactly what these new powers deliver. To anyone with an outstanding debt - our door is open and DWP will always work with you to find an affordable way to repay. But for those who can pay and won’t - we’re going further than ever before to claw back cash and crack down on fraud.”
CPAG also said it was having cases flagged to it where people are having problems: “CPAG’s Early Warning System regularly receives reports about benefits being suspended for long periods of time, a decision which cannot be appealed, and incorrect decisions being made following UC review processes. If claimants experience difficulties due to information received in response to an EVN, CPAG would be interested in hearing about these case studies at ews@cpag.org.uk.”
