The Department for Work and Pensions has introduced new Eligibility Verification powers allowing banks to flag accounts of Universal Credit, Pension Credit and ESA claimants where savings exceed £16,000 or there are signs of extended time spent abroad. Banks cannot share transaction data or special category information, and no automatic benefit decisions will be made on the data alone.
The Department for Work and Pensions (DWP) has released guidance outlining what banks and financial institutions may be required to monitor under new benefit Eligibility Verification powers.
The new framework forms part of the UK Government’s broader offensive against fraud and error within the welfare system, and will initially cover those claiming Universal Credit, Pension Credit and Employment and Support Allowance (ESA).
Under the Eligibility Verification Measure (EVM), banks may be obliged to scrutinise accounts receiving certain DWP benefits and identify instances where accounts meet specific “eligibility indicators” tied to benefit regulations.
The DWP stated the checks are intended to help detect incorrect payments arising from fraud, claimant error or official error, while also preventing claimants from accumulating substantial overpayments that subsequently need to be recovered.
According to the new Code of Practice on Eligibility Verification Notices, banks could be required to flag accounts where savings surpass benefit thresholds, reports the Daily Record.
For Universal Credit, this could encompass accounts holding more than £16,000, which represents the upper capital limit for the benefit.
The guidance further states that the DWP may request information relating to signs that a claimant has spent more time overseas than benefit rules ordinarily permit.
Nevertheless, the DWP confirmed there are stringent legal restrictions governing what banks are permitted to share. The Code stipulates that financial institutions are forbidden from disclosing transaction details, which means the DWP is unable to access information about individuals’ purchases, shopping habits or personal spending patterns.
Banks are equally barred from sharing “special category data”, encompassing details relating to political opinions, religious beliefs, ethnicity or health information.
The guidance 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.”
What banks cannot share
The document further clarifies that the DWP is not permitted to request that banks search for named benefit claimants.
The code repeatedly emphasises that strict limitations govern the information banks are able to provide.
DWP said financial institutions are prohibited by law from sharing:
- Transaction histories
- Spending information
- Financial statements
- Special category data such as political opinions, religion or ethnicity
Rather, financial institutions would apply eligibility criteria across their own systems and only return limited information where accounts match the indicators set out in an Eligibility Verification Notice (EVN).
The information that may be passed on to the DWP encompasses account details, names and dates of birth linked to accounts, and details demonstrating how an account satisfied the eligibility indicator.
This could include confirmation that savings surpassed a certain threshold or evidence that an account had been regularly used outside the UK.
The DWP stressed that information returned by banks does not automatically mean somebody has done anything wrong. The Code states: “No decisions about benefit entitlement will be made automatically on this information alone.”
Instead, the DWP must cross-reference the information with existing evidence held on a claim before determining whether further investigation is warranted.
The guidance further confirms that a “Test and Learn” rollout phase will take place, initially involving a limited number of financial institutions prior to any broader expansion.
Throughout this period, the DWP has stated it will evaluate the system’s effectiveness, the reliability of the data, and whether the safeguards are functioning as intended before proceeding with wider implementation.
The DWP estimates benefit fraud and error resulted in £9.6 billion of overpayments during the 2025/26 financial year.
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