The Department for Work and Pensions (DWP) is moving forward with new legislation that will require banks to scrutinise the accounts of millions of benefit claimants. The checks will initially cover three benefits, but a compliance specialist has indicated that the scope could widen to include Child Benefit, Carer's Allowance and Personal Independence Payment (PIP).
New Legislation and Initial Benefits Covered
Under legislation enacted in December 2025, banks will be obliged to examine account records associated with particular benefits and report any questionable accounts to the DWP for further investigation, where an individual may not qualify to receive their payments. The initial rollout will cover people receiving Universal Credit, Employment and Support Allowance (ESA) and Pension Credit.
The DWP confirmed it is making “good progress” in implementing the new powers and will commence a “test-and-learn phase” this year to trial the new measures. It intends to progressively expand the checks, with complete deployment anticipated by 2029/2030.
Potential Expansion to Other Benefits
Phil Cotter, CEO of compliance firm SmartSearch, discussed where the scope of the bank account checks could be extended to going forward. He commented: “In principle, eligibility checks could be extended to any other benefits where identity, financial circumstances or residency are relevant. These could include Child Benefit, Carer's Allowance, Disability Living Allowance and Personal Independence Payment, although the appropriate checks would obviously depend on the specific eligibility criteria.”
The DWP is collaborating with industry partners to guarantee the checks are conducted “safely and effectively.” The legislation indicates that these checks could be widened to encompass other benefits in the future.
Expert Views on the Test-and-Learn Phase
Mr Cotter suggested the proposed bank account verification system could prove highly beneficial. He stated: “The DWP's planned test-and-learn phase is an opportunity to establish how bank account checks can reduce fraud and error without wrongly penalising people who are entitled to support. Used effectively, these checks could help identify discrepancies in claimants' eligibility earlier, prevent incorrect payments and reduce the cost of recovering overpayments later.”
He added that the priority for the test phase “must be accuracy,” to ensure the checks “identify genuine fraud and administrative errors while ensuring that public money reaches those who are entitled to it”. Mr Cotter recommended that the DWP cross-reference banking information with additional “reliable data sources”, including “HMRC records” and “verified identity information”, to guarantee officials obtain a comprehensive understanding of each claimant's circumstances.
Accuracy and Oversight
Mr Cotter emphasised that the DWP must draw lessons from the preliminary testing stage instead of hastily expanding the scheme: “It is important that any expansion is based on evidence from this initial rollout, rather than simply extending the powers across the benefits system as quickly as possible. The DWP needs to be able to demonstrate that the checks are accurate, proportionate and subject to effective oversight. This will help ensure that any future expansion reduces fraud and error without undermining confidence among people who rely on benefits.”
The DWP has previously provided assurances that no individual will have their benefits suspended purely because their bank account has been identified. The new legislation also grants investigators authority to withdraw funds directly from bank accounts if someone is indebted to the DWP and declines to repay what they owe. This authority is designed to reclaim money from individuals who have exited the benefits system. Until now, the DWP could only retrieve outstanding debts by deducting money straight from continuing benefit payments or PAYE salaries.
