The Department for Work and Pensions (DWP) has published new guidance clarifying exactly what banks can and cannot share under controversial new benefit-monitoring powers aimed at tackling welfare fraud and overpayments.
The measures, known as the Eligibility Verification Measure (EVM), will initially apply to people receiving Universal Credit, Pension Credit and Employment and Support Allowance (ESA). While critics have raised concerns about privacy, the DWP insists the system includes strict safeguards and will not allow officials to see claimants’ spending habits or transaction histories.
The new powers form part of the Government’s broader effort to reduce fraud and error across the welfare system, which the DWP estimates resulted in £9.6 billion of overpayments during the 2025/26 financial year.
What Is the Eligibility Verification Measure?
Under the new system, banks and financial institutions may receive Eligibility Verification Notices (EVNs) from the DWP.
These notices require financial institutions to check whether accounts receiving certain benefits meet specific indicators linked to eligibility rules.
The purpose is to identify cases where benefit payments may be incorrect due to:
- Fraud
- Claimant error
- Official error
The DWP says the scheme is also designed to prevent claimants from unknowingly building up large overpayments that could later be recovered.
Further information about benefit eligibility rules can be found on the Government website at https://www.gov.uk/universal-credit and https://www.gov.uk/pension-credit.
What Banks May Be Asked to Check
According to the DWP’s Code of Practice on Eligibility Verification Notices, financial institutions could be required to identify accounts that match certain eligibility indicators.
Examples include:
| Eligibility Indicator | Why It Matters |
|---|---|
| Savings above £16,000 | Universal Credit generally ends when capital exceeds this limit |
| Signs of prolonged overseas use | Some benefits have rules limiting time spent abroad |
| Other eligibility-related indicators | Linked to specific benefit regulations |
For Universal Credit claimants, one of the most significant checks involves capital levels.
Current rules generally prevent entitlement to Universal Credit when a claimant has more than £16,000 in savings or capital, as outlined at https://www.gov.uk/universal-credit/eligibility.
The DWP says banks may be asked to identify accounts exceeding such thresholds but will not determine entitlement themselves.
What Banks Cannot Share
One of the strongest messages contained in the new guidance is that strict legal restrictions apply to the information financial institutions can provide.
The DWP specifically states that banks are prohibited from sharing:
| Information Type | Can Be Shared? |
|---|---|
| Transaction history | No |
| Individual purchases | No |
| Spending habits | No |
| Financial statements | No |
| Political opinions | No |
| Religious beliefs | No |
| Ethnicity information | No |
| Health information | No |
The Code states:
“DWP is prohibited by law from sharing personal data with financial institutions under this power, and from requesting transaction information and special category data.”
That means officials cannot see where claimants shop, what they buy, who they pay, or how they spend their money.
DWP Cannot Ask Banks to Search for Named Individuals
The guidance also addresses concerns that the Department could instruct banks to investigate specific claimants.
According to the Code of Practice, this is not permitted.
Instead, banks apply eligibility criteria across relevant accounts within their own systems and only return limited information when an account matches the conditions specified in an Eligibility Verification Notice.
The process is designed to focus on eligibility indicators rather than individual surveillance.
What Information Could Be Shared?
While transaction-level data is off limits, some information may still be returned to the DWP if an account matches an eligibility indicator.
This may include:
- Account details
- Name of the account holder
- Date of birth
- Information showing why the account matched the indicator
Examples could include:
| Possible Information Returned | Example |
|---|---|
| Capital threshold exceeded | Savings above £16,000 |
| Overseas use indicator | Evidence of prolonged account use outside the UK |
| Account identification details | Name and date of birth |
The DWP says this information would only be used as part of a wider review process.
A Flag Does Not Mean Benefits Will Stop
The Department has emphasized that a bank flag does not automatically mean a claimant has broken any rules.
Officials state that no benefit decisions will be made solely on information supplied through the EVM process.
The guidance explains:
“No decisions about benefit entitlement will be made automatically on this information alone.”
Instead, any information received must be considered alongside other evidence already held on a claim.
If necessary, the DWP may contact a claimant for further information before taking any action.
Information on claimant rights and benefit decisions is available through https://www.gov.uk/benefit-overpayments.
Pilot Scheme Before Wider Rollout
The DWP has confirmed that implementation will begin with a limited “Test and Learn” phase.
During this stage:
- A small number of financial institutions will participate.
- The accuracy of the system will be assessed.
- Safeguards will be monitored.
- Operational effectiveness will be reviewed.
Only after evaluating the results will ministers consider expanding the programme more widely.
The Department says the phased approach is intended to ensure the system works as intended and that privacy protections remain effective.
Why the Government Says the Changes Are Needed
The Government argues that the measures are necessary because fraud and error continue to cost taxpayers billions of pounds each year.
According to DWP estimates, overpayments linked to fraud and mistakes reached £9.6 billion in 2025/26.
Ministers say earlier detection of eligibility issues could:
- Reduce incorrect payments.
- Protect public finances.
- Prevent claimants from accumulating large debts through overpayments.
- Improve confidence in the welfare system.
However, privacy campaigners and some welfare groups are expected to continue scrutinising the rollout as implementation progresses.
Claims circulating on social media suggesting the DWP will be able to monitor claimants’ purchases, bank statements, shopping habits or transaction histories are not supported by the published Code of Practice.
The official guidance explicitly states that banks cannot share transaction data, spending information or special category personal data under the Eligibility Verification Measure.
The system is designed to identify specific eligibility indicators rather than provide ongoing access to account activity.
For official information, readers should consult the DWP guidance and relevant Government publications at https://www.gov.uk.
The DWP’s new Eligibility Verification powers represent a significant expansion of fraud-prevention measures within the benefits system. However, the Government has sought to reassure claimants that strict legal safeguards will prevent access to detailed spending information, transaction histories and sensitive personal data.
As the pilot phase begins, the focus will be on testing whether the system can identify potential eligibility issues accurately while maintaining privacy protections. For claimants receiving Universal Credit, Pension Credit or ESA, the key message from the DWP is that being flagged by a bank will not automatically affect benefit entitlement and any decisions will continue to involve human review.
FAQs
1. Will the DWP be able to see my bank transactions?
No. The Code of Practice states that banks are prohibited from sharing transaction histories, purchases or spending information.
2. Which benefits are affected by the new checks?
The initial rollout will apply to Universal Credit, Pension Credit and Employment and Support Allowance (ESA).
3. Can banks tell the DWP how much money I have in savings?
Banks may be asked to identify accounts that exceed eligibility thresholds, such as the £16,000 Universal Credit capital limit.
4. Will my benefits stop automatically if my account is flagged?
No. The DWP says no entitlement decisions will be made automatically based solely on information received from banks.
5. When will the new system start?
The DWP has confirmed a limited “Test and Learn” phase involving a small number of financial institutions before any wider rollout.
