Banks will share limited account information with the DWP under new rules designed to catch incorrect benefit payments before overpayments become larger debts.
The Department for Work and Pensions has set out how a new bank-checking system will operate for people claiming Universal Credit, Pension Credit and New Style Employment and Support Allowance, as the government steps up efforts to spot incorrect payments before they grow into larger debts. Under the Eligibility Verification Measure, banks and other financial institutions will be asked to look for specific indicators linked to benefit eligibility and to alert the department when an account appears to match those flags, according to guidance published by the DWP and the final code of practice. The measure is designed to identify cases for review, not to accuse claimants of wrongdoing or to give officials a live view of personal finances.
The DWP says the information shared will be tightly limited. Institutions may provide the names of account holders, account details, account numbers, sort codes where available, balances in relevant accounts and the dates of overseas transactions. They may also include linked and joint accounts, which means an account associated with a claimant or another person could be drawn into the process if it meets the eligibility indicators. However, the department says it will not receive full bank statements, a real-time feed of transactions, detailed spending habits or sensitive personal data such as political views or religious beliefs.
If a bank flag suggests a claimant may be receiving the wrong amount or may not be eligible, the DWP says staff will review the case and may then ask for more information. Claimants with an online account are likely to be contacted through their journal, while others may hear by phone, text or letter. The department has warned people to reply quickly, saying delays could result in payments being held up or stopped while enquiries continue. The guidance also makes clear that a flag alone does not determine fraud or overpayment; it is the start of a check, not the end of one.
The DWP has also reminded claimants that they are responsible for reporting changes in circumstances promptly, because failing to do so can lead to overpayments that may later have to be repaid and, in more serious cases, could trigger prosecution or a fine. That warning sits alongside the wider policy aim behind the system: to reduce losses from fraud, claimant error and official error, and to prevent debts from building up unnoticed. The final rules form part of the Public Authorities (Fraud, Error and Recovery) Act 2025, which gives the department new powers to work with banks on targeted checks.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
