The Department for Work and Pensions (DWP) has unveiled significant new measures that will empower banks and financial institutions to scrutinise the bank accounts of benefit claimants as part of a major crackdown on fraud. Under the Labour Party government's sweeping reforms, staff at the UK's 15 largest banks will be authorised to access and review account data for individuals receiving specified DWP benefit payments.
How the New Bank Account Checks Will Operate
Financial institutions will be required to match these accounts against specific eligibility indicators determined by the DWP, as outlined in an Eligibility Verification Notice. The indicators are based on the existing rules for benefit eligibility, meaning banks will check whether claimants meet the criteria to continue receiving payments.
Savings Thresholds and Eligibility Rules
For example, under Universal Credit regulations, an individual cannot hold more than £16,000 in savings and remain eligible for the benefit, unless this capital arises from a specified exception. The DWP has clarified that any accounts flagged during these checks will be considered for further inquiry, but no decisions about benefit entitlement will be made solely on this information.
Debt Recovery and Direct Deduction Procedures
In related developments, the DWP debt management team will initiate contact with individuals who owe money but are not in PAYE employment or no longer receiving benefits. Over a four-week period, multiple attempts will be made via letter or phone to agree on a voluntary repayment plan.
If no contact is established, the case escalates to the DWP debt enforcement team, which will make four further attempts at communication, including written correspondence. Should there still be no response, the DWP may contact any bank where the individual holds an account—not just the one used for benefit payments—to request at least three months' worth of bank statements.
Privacy Concerns and Legal Implications
Notably, banks are prohibited from informing customers if this process occurs, raising privacy concerns among advocacy groups. If the DWP determines that the individual can afford it, they will issue a 'direct deduction order' to recover the debt directly from the bank account, while providing the right to challenge the decision.
This move represents a substantial shift in how benefit fraud is tackled, aiming to enhance compliance and reduce losses, but it also sparks debate over surveillance and financial privacy in the welfare system.
