The guidance follows the introduction of the Public Authorities (Fraud, Error and Recovery) Act, which became law in December. It explains how financial institutions must respond to government requests and what happens when an account is flagged for further examination.
What Information Banks Must Provide to the DWP
Under the Eligibility Verification Measure (EVM), banks and other financial institutions must check accounts against eligibility indicators supplied by the DWP. These checks currently cover Universal Credit, Pension Credit and New Style Employment and Support Allowance (ESA).
According to The Independent, financial institutions must disclose specified information when an account receiving a relevant benefit meets one of these indicators. The details include the names of all account holders, account numbers, sort codes and information about linked or joint accounts.
Banks may also provide information about the amount of money held in relevant accounts and the dates of transactions conducted abroad. Joint accounts can be included even when another account holder does not receive benefits.
The checks are intended to identify cases where a claimant’s financial circumstances may not meet the conditions attached to their payments. For example, savings exceeding ÂŁ16,000 generally make someone ineligible for Universal Credit.
There are limits on what financial institutions can disclose. According to the Daily Record, banks cannot provide full statements, transaction histories, details of purchases or specific locations where money was spent.
Sensitive personal information, including political opinions and religious beliefs, is also excluded. The DWP cannot access online banking accounts or monitor transactions in real time. Financial institutions that fail to comply with an eligibility verification notice may face penalties. They can also be fined for disclosing information prohibited under the measure.
How Benefit Reviews and Recovery Powers Will Operate
An account being flagged does not automatically establish that a claimant has received an incorrect payment. DWP staff must assess the information before deciding whether further enquiries or changes to entitlement are necessary.
Claimants may be asked to explain their circumstances or provide supporting evidence. Contact can take place through an online benefit journal, telephone call, letter or text message.
The Daily Record reports that claimants are advised to respond promptly, as payments could be delayed or stopped if requested information is not provided. Those disputing a decision can request mandatory reconsideration.
The legislation also introduces Direct Deduction Orders, allowing the DWP to recover certain overpayments directly from bank accounts. Ministers estimate that between 5,000 and 20,000 such orders will be issued annually.
Welfare overpayments reached ÂŁ9.9 billion in 2025/26, representing 3.2 per cent of expenditure. Fraud accounted for 2.2 per cent, claimant error 0.6 per cent and official error 0.4 per cent.
The government expects its wider fraud measures to save ÂŁ1.5 billion by 2029/30. Civil liberties organisation Big Brother Watch has criticised the banking powers, warning of an unprecedented system of mass financial surveillance. An independent reviewer will oversee the eligibility verification system, with reports submitted to Parliament. Information unrelated to benefit entitlement must be destroyed in accordance with DWP policy.
