Starting in April 2026, the Department for Work and Pensions (DWP) will be granted powers to conduct targeted checks on the bank accounts of individuals receiving certain means-tested benefits. These checks will aim to identify discrepancies that could suggest a claimant no longer qualifies for their benefit, such as having savings over the capital limit. This change is part of the Public Authorities (Fraud, Error, and Recovery) Bill, designed to tackle fraud and reduce overpayments, which cost the government billions every year.
This new power will be phased in, with strict safeguards to protect claimant privacy. Here’s what you need to know about how these changes will affect you.
What the DWP Will and Will Not Be Able to Do?
What DWP Can Do?
- Eligibility Verification Notices (EVN): DWP can issue an EVN to banks, which will check if a claimant has certain eligibility markers, such as bank balances exceeding the capital limits for benefits.
- Automated Flagging: If a flagged indicator is found, banks will return a flag to the DWP, which will then initiate further investigations.
What DWP Cannot Do
- No Full Access to Statements: DWP cannot access your full bank statement or spending history. Only specific eligibility indicators (such as balance thresholds) will be checked.
- No Automated Decisions: Flagged cases will not result in automatic sanctions or terminations. A human review will be conducted before any decisions are made.
Who Is Affected by the Bank Account Checks?
People Who Are Exempt
- State Pension-Only Claimants: Individuals who receive only the State Pension will not be included in the new checks. The measure does not apply to State Pension accounts.
- Exemption for Some Groups: Certain groups, such as those in receipt of Pension Credit or certain types of disability benefits, may still be subject to these checks if their benefits are means-tested.
People Who Will Be Affected
- Universal Credit Claimants: Claimants of Universal Credit and other means-tested benefits such as Housing Benefit, Income Support, Income-based JSA, and Pension Credit (when applicable) may be subject to these checks.
- Mixed-Benefit Households: Households that receive a combination of benefits (e.g., State Pension and means-tested benefits like Pension Credit) will have the non-Pension Credit benefits checked.
Why Is This Change Happening?
The UK government faces substantial losses due to fraud and overpayments. In 2023–24, it was estimated that £9.7 billion was overpaid, with a significant portion attributed to fraud. These new powers will help reduce fraud and errors, ensuring that benefits are correctly paid to eligible claimants.
What Data Will Be Shared During the Checks?
What Will Be Shared
- Eligibility Indicators: If certain conditions are met—such as savings exceeding the threshold—banks will share a flag with DWP. No personal spending data or detailed bank statements will be shared.
- Minimal Personal Identifiers: Only basic information needed to match an account to a claimant will be shared.
What Will Not Be Shared
- Full Bank Statements: DWP will not access your detailed spending or purchase history.
- Itemized Transactions: Information about where you shop, how much you spend, or what you purchase will not be shared.
- Automatic Penalties: The system does not issue automatic sanctions or changes to benefits based on flagged information. Each flagged case will be manually reviewed by a DWP caseworker.
How Will the Process Work? Step by Step
- Targeting by DWP: The DWP will identify benefit claimants who might be at risk of exceeding the capital limit for means-tested benefits.
- EVN Issued: The DWP will issue an Eligibility Verification Notice (EVN) to participating banks, asking them to check for eligibility markers.
- Bank Screening: Banks will conduct automated checks based on the rules set out in the Code of Practice and will return flags if an issue is found.
- Human Review: DWP staff will review the flagged cases and may request additional evidence from claimants to verify eligibility.
- Outcome: If the discrepancy is confirmed, DWP may adjust benefits, request repayment of overpayments, or close the case if eligibility is confirmed.
Safeguards and Oversight
- Code of Practice: Before the notices are used, the Code of Practice will be laid before Parliament. This document will ensure that checks are proportional, privacy-conscious, and only focused on eligibility.
- Human Oversight: All flagged cases will be reviewed by a human to ensure fair treatment and to avoid automatic benefit cancellations or sanctions.
- Phased Rollout: The new system will gradually be rolled out between 2026 and 2031, with periodic evaluations and reporting to Parliament.
Practical Implications for Different Groups
- State Pension-Only Households: No impact. Your State Pension account will not be involved in these checks.
- Pension Credit Recipients: If you receive Pension Credit, your eligibility for the means-tested part of the benefit may be subject to checks.
- Universal Credit and Other Claimants: Ensure your financial details, such as savings, income, and changes to household composition, are always up to date to avoid overpayments or mistakes.
Final Thoughts: How to Protect Yourself
As these new powers come into effect in April 2026, it’s crucial for those on means-tested benefits to ensure their details remain accurate and up to date. Respond promptly to any requests for evidence from the DWP, and retain records that show you meet the criteria for your benefits.
By doing so, you can avoid any unnecessary issues with your claims and protect yourself from potential overpayments or penalties.