Banks can be told to directly check the eligibility of welfare claimants under new powers – and it could cause some people to lose their benefits.
The Department for Work and Pensions (DWP) can now require banks to inform them whether there are signs that benefit claimants do not meet eligibility rules for the support they receive.
The data they pass on – which can include whether savings are held above a certain threshold – could lead to some benefit claims being reviewed, and, in some cases, payments being stopped altogether.
The first of these requests were sent out to banks last month. Ministers estimate the move could save the Treasury £1.2bn by 2030/31 , by cutting fraud.
However, the new powers have faced criticism, with civil liberties group Big Brother Watch calling them a “snooper’s charter”.
How the new powers work
Under the Public Authorities (Fraud, Error and Recovery) Act, which became law in December 2025, the Government gained the power to ask banks for information on benefit claimants.
These requests – or eligibility verification notices – can only be used for people on universal credit, pension credit or employment and support allowance.
Banks are told what to look for, based on the rules for each benefit, and are asked to check accounts for signs someone may not meet the criteria.
For example, a person is not permitted to claim universal credit if they have more than £16,000 in savings or spend more than a month of the year abroad.
Banks could therefore flag the accounts of claimants who breach either of these rules, after checking savings accounts or sharing the dates of transactions made in another country.
However, banks cannot share the details of statements or what a person spends their money on, and the DWP says it “cannot log into your online banking or see your account in real time”.
A flag does not automatically mean payments will be cut or stopped. However, it could lead the DWP to review a benefits claim. One possible outcome is a complete removal of benefits.
Ministers had initially planned to go further by letting the DWP look into bank accounts directly.
Last spring, then chancellor Rachel Reeves said officials would be able to “verify” claimants’ bank accounts using Open Banking – a system that lets banks share account details with a customer’s consent. She claimed this would save £200m by 2030.
However, Chancellor John Healey has scrapped that plan, The Telegraph reported, with a DWP spokesman saying it “relied on claimant consent and could not be used in every universal credit claim”.
Could you lose your benefits?
If an account is flagged after an eligibility check, the DWP will review the benefits claim.
Officials could ultimately find that a claimant is not eligible or is being overpaid. In this instance, payments can be cut or ended – and a person may be required to repay money.
However, there are cases where benefits can stay the same even if the bank flags an account.
For example, some money is ignored when working out savings – such as compensation for an injury; money held in trust for someone else; or money from selling a home that is planned for use in buying another.
The DWP says it will take these exceptions into account, but a person may need to prove where the money came from – otherwise it will count towards savings.
A flag for time abroad may not affect a claim if the DWP was told about the trip, or if it was for a reason that allows a longer stay, such as medical treatment or the death of a close relative.
What critics and ministers say
Announcing the first bank checks last month, DWP minister Lilian Greenwood said benefit fraudsters “should be looking over their shoulder”.
She added that the Government was “not interested in where people do their weekly shop or how much they’re spending on new clothes”.
But Big Brother Watch has called the checks a “snooper’s charter”.
When the powers became law last December, the group said they were “an unprecedented expansion of suspicionless mass surveillance, deputising private banks as an arm of the state and treating benefits recipients as suspects-by-default”.
Referring to the Post Office Scandal, Big Brother Watch warned the powers “risk exposing hundreds of thousands of innocent people to Horizon-style injustices”.
It said it had won a concession so that anyone flagged “can’t automatically be treated as guilty of wrongdoing”.
Disability Rights UK also warned the DWP could use the checks to “undertake fishing exercises with absolutely no evidence of fraud”.
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