Major new powers granted to the Department for Work and Pensions will allow it to directly scrutinise the bank accounts of benefits claimants. The Labour government's legislation empowers the DWP to require banks and building societies to hand over specific customer information.
What Information Will Banks Have to Share?
Under the new Eligibility Verification Measure, financial institutions will be legally compelled to provide six key pieces of data when served with an Eligibility Verification Notice. The DWP will force banks to disclose:
- The account's sort code and account number.
- The full name of the account holder.
- The account holder's date of birth.
- For joint accounts, the names and dates of birth for both parties.
- Specific details on how the account meets the DWP's eligibility indicators.
The primary aim is to help officials verify a claimant's entitlement to state support and to identify any incorrect payments being made. The DWP has stressed that "a human will always be involved" in any decision that could affect a person's benefits.
How the New Checking System Will Work
Banks and other financial institutions will be required to scan their data for accounts receiving specified DWP benefit payments. They must then cross-reference these accounts against eligibility indicators set by the welfare department.
The DWP has issued a warning to banks about the consequences of providing too much information. "Banks and other financial institutions could receive a penalty for oversharing information, such as transaction information," a statement clarified. The department insists that any data shared is not done on the presumption of guilt.
Concerns Over Impact on Vulnerable Claimants
The move has not been without criticism. An independent watchdog, the Regulatory Policy Committee, reviewed the Public Authorities (Fraud, Error and Recovery) Bill and raised significant concerns.
The committee stated that the government's impact assessment "does not sufficiently take into consideration the potential impact on the poorest members of society of reclaiming overpayments due to error." It concluded that the effect on the most vulnerable had been understated.
Despite these concerns, the DWP maintains that the new powers are a necessary tool to ensure benefit payments are correct and to protect public funds from fraud and error.
