The Department for Work and Pensions (DWP) is set to enhance its efforts to reduce benefit fraud by using new powers to run automated checks on bank accounts from October onwards. Under the Public Authorities (Fraud, Error and Recovery) Act 2025, major UK banks are now required to identify and report certain financial activities of benefit recipients, including Universal Credit, Pension Credit and Employment and Support Allowance (ESA), that may indicate fraud or rule infringements.
According to the Child Poverty Action Group (CPAG), which has highlighted the expected criteria, banks will flag accounts with suspicious activity relevant to benefit eligibility. Although the DWP has not publicly confirmed specific indicators, CPAG suggests that red flags will focus on aspects such as account balances exceeding capital limits and extended periods spent abroad.
For example, claimants with savings over £16,000 may be reported since having capital above this amount renders them ineligible for Universal Credit. The DWP may also scrutinise accounts showing consecutive foreign transactions lasting more than one month, as temporary absences abroad beyond permitted durations can breach benefit rules. The DWP Code of Practice mentions that case reviews might include account holders with savings between £6,000 and £16,000 to ensure correct payments.
CPAG has also reported receiving cases where benefits were suspended following bank data checks, sometimes without the possibility of appeal, and urges claimants facing such difficulties to share their experiences via their Early Warning System.
Furthermore, the DWP has begun contacting thousands of individuals with outstanding benefit debt, warning that failure to repay may result in direct deductions from bank accounts without court orders, as allowed by the new legislation. In serious cases, persistent debt avoidance could lead to court actions including the removal of driving licences.
Andrew Western, Work and Pensions Minister for Transformation, stated, “Hardworking taxpayers deserve a system that pursues those who deliberately dodge their debts, and that is exactly what these new powers deliver. To anyone with an outstanding debt - our door is open and DWP will always work with you to find an affordable way to repay. But for those who can pay and won’t - we’re going further than ever before to claw back cash and crack down on fraud.”
The enforcement of these new powers will be phased in from October 2026, providing a final opportunity for debtors to settle outstanding amounts or agree repayment plans. The measures include the Eligibility Verification Measure, enabling the DWP to obtain limited data from banks to identify incorrect benefit payments.
This initiative represents a significant advancement in the government’s approach to safeguarding public funds and ensuring compliance with benefit regulations.