DWP Launches Major Crackdown on Benefit Fraud with New Recovery Powers
The Department for Work and Pensions has unveiled a comprehensive suite of new anti-fraud powers designed to clamp down on wrongful benefit payments and recover funds from fraudulent claimants. These measures, recently approved through legislation, represent the most significant overhaul of benefit fraud prevention in years.
Direct Recovery from Bank Accounts
Among the most notable new powers is the authority to directly recover owed amounts from individuals' bank accounts when they have accumulated debts through fraudulent claims and are refusing repayment. The DWP will provide advance notice to affected individuals, who will have the opportunity to dispute the matter before any funds are deducted from their accounts.
This direct recovery mechanism represents a substantial escalation in the government's ability to reclaim taxpayer money that has been improperly paid out through the benefits system.
Enhanced Bank Account Monitoring
Financial institutions will now be required to scrutinize bank accounts linked to specific benefit payments under the new regulations. Banks must identify and flag accounts that may not be eligible for their associated benefits, then forward these details to the DWP for further investigation.
Initially, these enhanced monitoring powers will focus on accounts connected to three key benefits: Pension Credit, Employment and Support Allowance, and Universal Credit. The legislation provides for potential expansion to other benefits in the future.
Security Experts Call for Better Verification Systems
While welcoming the new powers, security verification specialists argue that the DWP should implement more robust initial checks rather than relying primarily on post-payment recovery measures.
Phil Cotter, Chief Executive Officer at compliance verification firm SmartSearch, emphasized: "Preventing fraud and error requires investment in better verification upfront, not just stronger enforcement after the fact. A well-designed digital identity system that protects privacy could significantly reduce both fraud and administrative errors by ensuring correct identification from the outset."
Projected Savings and Systemic Improvements
The DWP projects that these new measures will save taxpayers approximately £2.1 billion over the next five years. The department has set an ambitious target to reduce fraud and error levels to just 2.8 percent by the 2028/29 financial year, which would represent the lowest rate since tax credits were introduced in 2003.
Cotter suggested that enhanced data sharing could further improve outcomes: "In a benefits context, combining real-time HMRC or payroll data with departmental data matching would help identify issues earlier and reduce costly overpayments."
The security expert noted that many wrongful payments stem from DWP administrative errors rather than claimant mistakes, stating: "The DWP needs better systems, better data integration and clearer processes; placing more burden or suspicion on claimants is not the right approach."
Balancing Effectiveness with Accuracy
Regarding the new bank account eligibility checks, Cotter acknowledged they could be "an incredibly useful tool" for identifying incorrect payments but cautioned against overreliance on single data sources.
"Acting on information from a bank account check alone could easily lead to false positives if taken out of context," he warned. "The most effective approach would combine bank account checks with other verification methods, particularly for cases already flagged by multiple risk indicators such as identity inconsistencies, links to multiple accounts, or patterns associated with organized fraud."
Cotter advocated for an integrated verification system: "If you combine bank data with good digital identity verification and solid cross-checks with HMRC, DWP and other Government data, you get a much clearer picture of eligibility without wrongfully identifying legitimate claimants in the process."
Government Assurance and Oversight
A DWP spokesperson provided assurance about the new measures: "Our reforms will ensure people are paid the correct benefits and overpayments are recovered, and are supported by the effective use of data to minimise the risk of fraud and error. The powers in the Fraud, Error and Recovery Act have numerous safeguards and will be independently overseen."
When the legislation received royal assent in December 2025, DWP minister Andrew Western emphasized: "It is right that as fraud against the public sector evolves, the Government has a robust and resolute response. The powers granted through the bill will allow us to better identify, prevent and deter fraud and error, and enable the better recovery of debt owed to the taxpayer. A benefits system people can trust is essential for claimants and taxpayers alike – through this bill that's exactly what we'll deliver."
