The new DWP crackdown, which became law this month, requires banks to provide limited banking data about Universal Credit and other means-tested benefit claimants to identify potential overpayments
A new law, enacted this month (December), will focus on 15 banks and financial institutions, it has been confirmed. The Public Authorities (Fraud, Error and Accountability) Bill, designed to curb benefit fraud and ensure aid reaches those genuinely in need, will now be employed to target direct lawbreakers.
The newly introduced rule, known as the DWP Eligibility Verification Measure (EVM), permits banks to share limited banking data with the DWP about individuals receiving means-tested benefits such as Universal Credit, Pension Credit, and ESA. The objective is to identify potential overpayments or ineligible claims based on account balances.
Despite the DWP’s assurance that transaction details won’t be shared, many privacy advocates and vulnerable households are apprehensive about government surveillance.
The 15 banks required to provide this information are, in alphabetical order: Bank of Scotland, Barclays, Halifax, HSBC, Lloyds Bank, Metro Bank, Monzo Bank Limited, NatWest, Nationwide, Santander, Starling, the Co-op, RBS, TSB and Yorkshire Bank.
Some MPs have expressed concerns that this could lead to banks flagging millions of accounts without specific cause, resulting in unwarranted investigations and causing nationwide distress for benefit claimants.
Accountancy firm Clarkwell and Co stated that the crackdown will target those on means-tested benefits where savings and income affect their eligibility. The following groups may be affected, according to the accountants:
- Universal Credit
- Pension Credit
- Employment and Support Allowance (ESA)
- Jobseeker’s Allowance (JSA)
Clarkwell and Co explained: “Banks will automatically check accounts linked to benefit payments to see if claimants go over the Universal Credit savings limit of £16,000. Even short-term increases in bank balances, like receiving gifts or temporary transfers, can raise concerns.”
The firm added: “Claimants should know that their eligibility is now partly judged by their banking information, even if they aren’t being watched closely. It’s important to understand your rights and responsibilities regarding DWP bank checks. If there’s a mistake, claimants should feel confident to appeal and explain their situation.”
Addressing widespread confusion about whether funds can be seized or frozen, Clarkwell clarified: “A common myth about this rule is that the DWP can take money from accounts or freeze funds. This isn’t true. The law doesn’t let the DWP take money without going through a legal process. Instead, it allows for:
- Banks to alert DWP when eligibility thresholds are breached.
- DWP to investigate possible overpayments.
- Recovery of confirmed overpayments through agreed plans or legal orders.
“The bill also allows the government to suspend driving licences for people who owe over £1,000 in welfare debts and won’t pay. This has raised concerns about strict measures against vulnerable individuals. However, there are protections in place. People can appeal decisions, ask for reassessments, or get help from professionals to understand their rights.”
The Government’s plans to tackle multibillion-pound benefit fraud have sparked fierce criticism from MPs, who’ve branded them “tools of an Orwellian surveillance state” that risk putting people through “absolute hell”. The Public Authorities (Fraud, Error and Recovery) Bill is proposing to empower the Department for Work and Pensions (DWP) to directly recover funds from fraudsters’ bank accounts.
It also seeks to grant the DWP authority to access bank statements of individuals suspected of having sufficient funds to repay welfare debts but are refusing to do so.
Additionally, courts could have the power to suspend the driving licences of fraudsters upon application by the DWP, if they owe more than £1,000 in welfare debts and have consistently ignored requests for repayment.
Last year, Independent MP for Coventry South, Zarah Sultana, expressed her concerns in the Commons: “These powers allow the Department for Work and Pensions to seize money directly from bank accounts, without due process, suspend driving licences and even search properties and personal devices.
“These are not the hallmarks of a free and democratic society, but the tools of an Orwellian surveillance state.”
The DWP has previously stated: “We know that the vast majority of DWP claimants bank with, and have their benefits paid into, the largest 15 banks in the UK. These banks and building societies receive over 97 per cent of all payments to DWP claimants.”
In previous discussions with UK Finance, banks, building societies and other financial institutions, the DWP clarified: “In discussion with UK Finance, banks, building societies and other financial intuitions, we have been clear that any data received under this measure should not be seen as indicative of any financial crime.
“Many claimants will have a legitimate, authorised reason to hold savings in excess of capital benefit rules (disregards for injury compensation, for example) and in many cases, overpayments could have been caused by genuine claimant error. Given this, we have been clear that there should be no action to de-bank claimants.”
