The measures form part of the Labour government’s proposed Eligibility Verification Measure, which will initially apply to Universal Credit, Pension Credit and Employment and Support Allowance claimants. According to guidance published by the DWP, financial institutions may be asked to identify accounts that meet certain eligibility indicators linked to benefit rules.
The government says the system is intended to reduce incorrect payments and prevent large overpayments from building up over time. Civil liberties groups and privacy campaigners have raised concerns about the scope of the powers, prompting the DWP to publish further details on how the checks would operate and what information would remain off limits.
Under the proposed framework, banks would not hand over detailed account activity to the government. Instead, they would apply specific criteria across their own systems and return limited information only where accounts meet conditions outlined in an Eligibility Verification Notice.
Banks Barred from Sharing Transaction and Spending Data
According to the DWP’s Code of Practice on Eligibility Verification Notices, financial institutions are legally prohibited from sharing transaction histories, spending information, financial statements and “special category data” such as political opinions, religious beliefs or ethnicity.
The guidance states that the DWP cannot see what claimants are buying, where they shop or how they spend their money. Health information is also excluded from the data-sharing process.
The department said: “DWP must only request the minimum information to identify individuals who meet the eligibility indicators, and relevant details related to how the indicators have been met.”
The guidance also makes clear that banks cannot be instructed to search for named benefit claimants. Instead, financial institutions would examine accounts already receiving certain benefits and flag cases where accounts appear to breach existing eligibility rules.
Examples could include accounts holding savings above the £16,000 capital limit for Universal Credit or evidence suggesting an account has been consistently used outside the United Kingdom for longer than benefit rules normally allow.
The DWP said any information shared would include only limited details, such as names, dates of birth, account identifiers and information explaining how an account matched the eligibility criteria.
New Checks to Begin with Limited Rollout
The new powers will initially focus on Universal Credit, Pension Credit and Employment and Support Allowance, which the government says have the highest levels of fraud, error and overpayment.
Accounts that may fall within the scope of the checks include current accounts, savings accounts and investment accounts. Some children’s accounts may also be included where benefit eligibility rules apply. Credit card accounts, current account mortgages, business accounts and accounts held outside the UK are excluded.
According to DWP guidance, information returned by banks will not automatically trigger changes to somebody’s benefits. The department said any accounts identified through the system would first be reviewed by officials before further action is considered.
The Code states: “No decisions about benefit entitlement will be made automatically on this information alone.”
The DWP also confirmed there will be a “Test and Learn” phase involving a small number of financial institutions before any wider rollout. During this period, the department said it would examine the accuracy of the data, assess how the process works in practice and evaluate whether safeguards are functioning as intended. According to government estimates cited in the guidance, benefit fraud and error led to £9.6 billion in overpayments during the 2025/26 financial year.
