DWP to Monitor Bank Accounts of Benefits Claimants Under New Anti-Fraud Powers.

New regulations will allow government to scrutinize financial transactions of eight million benefit recipients

The Department for Work and Pensions (DWP) is set to gain unprecedented powers to monitor the bank accounts of benefits claimants under new anti-fraud regulations coming into force in 2026.

Banks Will Flag Suspicious Activity to Government

The Public Authorities (Fraud Error and Recovery) Bill will enable banks to automatically flag accounts showing potential eligibility issues to DWP investigators. Rather than directly monitoring all claimants’ accounts, the system will use algorithms to identify suspicious financial activity that could indicate benefit fraud.

For example, if someone claiming Universal Credit—which has a £16,000 savings cap—maintains account balances exceeding this threshold, banks would alert the DWP for investigation.

£940 Million Expected Savings Over Five Years

Officials project the new monitoring system will save approximately £940 million over five years by reducing losses from fraud and administrative errors. The full rollout is expected to be completed between 2029 and 2031.

How the System Will Work

Under the new powers, the DWP will issue “Eligibility Verification Notices” to banks, outlining specific indicators they must monitor across benefit recipients’ accounts. Banks will then cross-reference account activity against these criteria and report potential discrepancies.

Currently, the DWP can only request banking information when they have reasonable grounds to suspect fraud. The new system reverses this approach, allowing banks to proactively identify and report suspicious accounts.

Eight Benefits Under Scrutiny

The monitoring will primarily affect means-tested benefits, which depend on applicants having income or savings below certain thresholds:

Income Support Benefits:

Universal Credit

Housing Benefit

Income Support

Income-based Jobseeker’s Allowance (JSA)

Income-related Employment and Support Allowance (ESA)

Additional Benefits:

Council Tax Support

Tax Credits (Working Tax Credit and Child Tax Credit)

Pension Credit

Privacy Concerns Raised

The new powers have sparked concerns about privacy and the protection of vulnerable claimants. Critics worry about the implications of automated surveillance systems monitoring the financial activities of millions of benefit recipients.

Gradual Implementation Planned

The government says it will adopt a “test-and-learn” approach starting in 2026 to ensure the powers are used effectively. Officials emphasize that only minimal account information will be shared unless warning signals are triggered, at which point more comprehensive investigations may be launched.

Government Justification

A government statement notes that the National Audit Office supports using data to detect and prevent fraud and error in public funds. The DWP argues the system will ensure “claimants are paid more accurately, more errors are found and resolved, and any suspected fraud can be identified and investigated sooner.”

The new powers represent a significant expansion of government surveillance capabilities over benefit recipients, marking a shift toward preemptive monitoring rather than reactive investigation of suspected fraud cases.