The Department for Work and Pensions (DWP) has released detailed guidance explaining what banks and building societies may be required to monitor under controversial new powers aimed at tackling benefit fraud and incorrect payments.
The measures form part of the Government’s wider fraud and error strategy and will initially focus on claimants receiving Universal Credit, Pension Credit and Employment and Support Allowance (ESA). Ministers say the system is designed to identify cases where benefit eligibility may need further review while ensuring stronger safeguards around personal banking information.
What Are the New Eligibility Verification Powers?
The new framework is known as the Eligibility Verification Measure (EVM).
Under the system, the DWP can issue Eligibility Verification Notices (EVNs) to banks and financial institutions, requiring them to check accounts against specific benefit-related eligibility criteria.
The Government says the aim is to identify situations where claimants may no longer meet entitlement rules due to factors such as excess savings or extended periods abroad.
According to the DWP’s Code of Practice, the powers are intended to help reduce fraud, claimant error and official error while preventing people from unknowingly building up large overpayments that later need to be repaid.
Further information about benefit fraud and error can be found on the Government website at https://www.gov.uk/government/collections/fraud-and-error-in-the-benefit-system.
What Could Banks Be Asked to Check?
The guidance indicates that banks may be asked to identify accounts that match specific eligibility indicators linked to benefit rules.
Examples include:
| Eligibility Indicator | Potential Benefit Impact |
|---|---|
| Savings above £16,000 | May affect Universal Credit entitlement |
| Evidence of extended periods overseas | May affect entitlement to certain benefits |
| Other eligibility criteria specified in an EVN | Could trigger further DWP review |
For Universal Credit, savings above £16,000 normally mean a claimant is no longer entitled to receive the benefit.
The DWP says financial institutions would apply these checks within their own systems and identify accounts that match the criteria outlined in a notice.
What Banks Cannot Share
One of the most significant points in the new guidance is the strict limitation placed on the information financial institutions can provide.
The DWP has stressed repeatedly that banks will not be allowed to share transaction-level data.
According to the Code of Practice, financial institutions are prohibited from sharing:
| Information Type | Can Be Shared? |
|---|---|
| Transaction history | No |
| Individual purchases | No |
| Spending patterns | No |
| Bank statements | No |
| Political opinions | No |
| Religious beliefs | No |
| Ethnicity information | No |
| Health-related information | No |
The DWP stated:
“DWP is prohibited by law from sharing personal data with financial institutions under this power, and from requesting transaction information and special category data.”
This means officials will not be able to see where claimants shop, what they buy, or details of day-to-day spending.
Can the DWP Ask Banks to Search for Specific Claimants?
No.
The Code of Practice specifically states that the DWP cannot ask banks to conduct searches for named individuals under these powers.
Instead, financial institutions must apply eligibility criteria across relevant accounts and only return limited information where an account meets the specified indicators.
This distinction has been highlighted by the Government as an important safeguard against broader monitoring of individual claimants.
What Information May Be Shared?
While transaction data is excluded, some limited information may still be provided where an account matches an eligibility indicator.
Examples include:
- Account details.
- Account holder names.
- Dates of birth associated with accounts.
- Confirmation that savings exceeded a specified threshold.
- Evidence showing how an eligibility indicator was met.
The DWP says this information is intended solely to help determine whether further investigation may be necessary.
Does a Flag Mean Someone Has Done Something Wrong?
The DWP says no.
The guidance makes clear that being identified through an Eligibility Verification Notice does not automatically mean a claimant has committed fraud or broken benefit rules.
The Code states:
“No decisions about benefit entitlement will be made automatically on this information alone.”
Officials must review any information alongside existing evidence held on a claim before deciding whether additional enquiries are required.
The department says human decision-makers will remain responsible for any entitlement decisions.
Initial Rollout Will Be Limited
The Government has also confirmed that the scheme will not be introduced across the entire banking sector immediately.
Instead, it will begin with a “Test and Learn” phase involving a small number of financial institutions.
During this period, the DWP says it will assess:
- Data accuracy.
- Operational effectiveness.
- Fraud detection rates.
- Privacy safeguards.
- Administrative impacts.
The results will help determine whether the programme should be expanded more widely in the future.
Official information about Universal Credit eligibility rules is available at https://www.gov.uk/universal-credit, while Pension Credit guidance can be found at https://www.gov.uk/pension-credit.
Why the Government Is Introducing the Measures
The move comes amid continuing concern over the scale of benefit overpayments.
According to the DWP, fraud and error resulted in approximately £9.6 billion of overpayments during the 2025/26 financial year.
Ministers argue that earlier identification of eligibility issues could reduce losses to taxpayers while preventing claimants from accumulating large debts that later need to be recovered.
However, privacy campaigners and welfare groups are expected to continue scrutinising the scheme as it moves through its testing phase.
What Claimants Should Know
For most benefit recipients, the key message is that the new powers do not give the DWP access to personal spending records or bank transaction histories.
Instead, banks may be asked to identify limited indicators linked to benefit eligibility, such as savings levels exceeding permitted thresholds.
Any information returned to the DWP will be subject to further review, and no benefit decisions will be made automatically based solely on data provided by financial institutions.
As the Test and Learn phase progresses, further details are expected to emerge about how the system will operate in practice and whether additional safeguards will be introduced before any wider rollout.
FAQs
1. Which benefits are affected by the new Eligibility Verification powers?
The initial rollout will apply to Universal Credit, Pension Credit and Employment and Support Allowance (ESA).
2. Can the DWP see what claimants buy?
No. Banks are prohibited from sharing transaction histories, spending data or information about individual purchases.
3. Can banks share bank statements with the DWP?
No. The Code of Practice specifically excludes bank statements and transaction-level information.
4. What could trigger a flag under the new system?
Examples include savings exceeding benefit limits or evidence that an account has been used abroad beyond permitted benefit rules.
5. Does being flagged mean a claimant has committed fraud?
No. The DWP says the information is only used as a starting point for further checks and does not automatically affect benefit entitlement.
