The Department for Work and Pensions (DWP) is set to implement new powers to scrutinise bank accounts of millions of benefit claimants, sparking warnings about potential 'false positives'. Under these measures, banks will be required to share data on accounts linked to specific benefits, including Universal Credit, as part of efforts to combat fraud and error.
New Eligibility Verification Measures
The fresh powers, enshrined in legislation passed in December 2025, include an eligibility verification measure. Officials will instruct banking providers to search through accounts linked to certain benefits and flag any that may not be eligible for payments. For instance, individuals with savings or investments exceeding £16,000 are ineligible for Universal Credit. For Pension Credit, every £500 in savings above £10,000 counts as £1 of weekly income, reducing the income top-up accordingly.
The DWP has clarified that it will not have direct access to people's bank accounts. These checks will initially target Universal Credit, Employment and Support Allowance (ESA), and Pension Credit claimants, with potential expansion to other benefits later.
Implementation Timeline
The powers will be activated after a consultation period and parliamentary approval of codes of practice. A 'test and learn' phase will ensure proper deployment.
'False Positives' Concerns
Stuart Morris, chief technology officer at SmartSearch, emphasised the need for accuracy during the trial phase. He stated: 'The DWP needs to test how effectively eligibility verification systems identify genuine fraud without creating unnecessary false positives. This includes validating data against multiple authoritative sources, ensuring digital identity checks are reliable, and confirming that automated processes can distinguish between suspicious activity and legitimate changes in circumstances.'
Morris highlighted the risk of missing document fraud, such as AI-generated bank statements, synthetic identities, or deepfake verification documents, which manual processes might catch. He called for robust safeguards around data access and decision-making, stressing: 'People need reassurance that their information is only being used for its intended purpose, retained for the minimum time necessary, and subject to independent oversight. Trust will be critical to the long-term success of these powers.'
Direct Fund Deductions
The legislation also empowers DWP officials to directly take funds from a person's bank account when they owe money and refuse to pay. This measure targets individuals who have left the benefits system. Previously, the DWP could only recover debts through benefit deductions or PAYE earnings. Investigators will contact the person to allow a dispute, and request at least three months of bank statements to confirm available funds.
Additionally, the laws expand investigators' powers to demand information from any third party connected to a suspect, not just those on a restricted list.
A DWP spokesperson previously stated: 'We have an obligation to protect public funds, with this legislation set to save the taxpayer £2.1 billion over the next five years, part of wider plans that will save £14.6 billion. The legislation includes an eligibility verification measure which will require banks to share limited data on claimants who may wrongly be receiving benefits. It does not involve access to benefit claimants' bank accounts.'
