New guidance sets out how banks may be asked to check accounts receiving Universal Credit, Pension Credit or ESA.
The Department for Work and Pensions (DWP) has published new guidance explaining what banks and financial institutions may be asked to check under new benefit Eligibility Verification powers.
The new system forms part of the UK Government’s wider crackdown on fraud and error in the welfare system and will initially apply to people claiming Universal Credit, Pension Credit and Employment and Support Allowance (ESA).
Under the Eligibility Verification Measure (EVM), banks may be required to examine accounts receiving certain DWP benefits and identify cases where accounts meet specific “eligibility indicators” linked to benefit rules.
READ MORE: DWP confirms five major benefits under review for fraud and error this yearREAD MORE: New call to replace DWP cash benefit payments with vouchers
The DWP said the checks are designed to help identify incorrect payments caused by fraud, claimant error or official error, while also preventing people from building up large overpayments that later need to be repaid.
According to the new Code of Practice on Eligibility Verification Notices, banks could be asked to flag accounts where savings exceed benefit thresholds.
For Universal Credit, this could include accounts holding more than £16,000, which is the upper capital limit for the benefit.
The guidance also states the DWP may request information linked to signs a claimant has spent more time abroad than benefit rules normally allow.
However, the DWP said there are strict legal limits on what banks can share.
The Code states financial institutions are prohibited from sharing transaction information, meaning the DWP cannot see what people are buying, where they shop or individual spending habits.
Banks are also banned from sharing “special category data”, including information relating to political opinions, religious beliefs, ethnicity or health information.
The guidance states: “DWP is prohibited by law from sharing personal data with financial institutions under this power, and from requesting transaction information and special category data.”
What banks cannot share
The document also makes clear the DWP cannot ask banks to search for named benefit claimants.
The code also repeatedly stresses strict limits apply to the information banks can provide.
DWP said financial institutions are prohibited by law from sharing:
- transaction histories
- spending information
- financial statements
- special category data such as political opinions, religion or ethnicity
Instead, financial institutions would apply eligibility criteria across their own systems and only return limited information where accounts match the indicators set out in an Eligibility Verification Notice (EVN).
The information that may be shared with the DWP includes account details, names and dates of birth linked to accounts, and details showing how an account met the eligibility indicator.
Examples could include confirmation that savings exceeded a certain amount or evidence an account had been consistently used outside the UK.
The DWP stressed information returned by banks does not automatically mean somebody has done anything wrong.
The Code states: “No decisions about benefit entitlement will be made automatically on this information alone.”
DWP must instead review the information alongside other evidence already held on a claim before deciding whether further checks are needed.
The guidance also confirms there will be a “Test and Learn” rollout phase involving a small number of financial institutions before wider expansion.
During this period, the DWP said it will assess how well the system works, how accurate the data is and whether safeguards are operating effectively before broader implementation.
The DWP estimates benefit fraud and error resulted in £9.6 billion of overpayments during the 2025/26 financial year.