DWP Eligibility Verification Powers in the Public Authorities (Fraud, Error and Recovery) Bill

The Department for Work and Pensions (DWP) has been granted new powers under the Public Authorities (Fraud, Error and Recovery) Bill to verify benefit eligibility using data from banks and financial institutions.

These powers aim to reduce fraud and error by identifying cases where claimants may not meet specific criteria, such as savings thresholds or time spent abroad.

Key points covered in this blog:

• What Eligibility Verification Notices (EVNs) are and how they work
• The specific data banks will be shared with DWP
• Which benefits are affected and why
• Oversight, safeguards and data privacy protections
• The financial impact and estimated savings
• The process for claimants and how inquiries are handled
• Insights on how this affects claimants and financial institutions

What Are the New DWP Eligibility Verification Powers Under the Bill?

The Public Authorities (Fraud, Error and Recovery) Bill proposes to give the Department for Work and Pensions the authority to access specific types of data held by banks and financial institutions.

The focus of this new power is on verifying a claimant’s eligibility for certain benefits more accurately and efficiently. Rather than depending solely on self-declared information, the DWP will be able to request data through what’s known as an Eligibility Verification Notice (EVN).

An EVN is not a blanket request. It is a targeted mechanism. These notices will specify the eligibility indicators that banks should use to assess whether the accounts in question align with or breach benefit criteria.

For example, if the benefit in question is Universal Credit, and one of the indicators is a savings threshold of £16,000, the EVN would request that banks identify accounts receiving this benefit which hold capital above that threshold.

The intent is to reduce overpayments by ensuring that the information the DWP uses to determine eligibility is accurate, complete and verified from independent sources. This isn’t about initiating a fraud case right away but checking whether further inquiry is warranted.

What Triggers an Eligibility Verification Notice?

The DWP will issue an EVN when it deems it necessary to verify certain criteria linked to benefit eligibility. These notices are designed to be proportionate and tightly scoped.

Financial institutions will be asked to search for accounts receiving a relevant benefit and compare them to the criteria set out in the notice.

Some examples of eligibility indicators include:

• Savings held above a legal threshold for a specific benefit
• Signs that a claimant may be spending extended time abroad
• Additional accounts linked to a claimant’s primary benefit-receiving account

Banks will only flag accounts that match these criteria. They will not be asked to interpret the information or make decisions. Their role is to identify and report only what is required.

What Type of Information Will Banks Share?

When an EVN is issued, banks and financial institutions will be required to share a limited set of data. This information will be used solely to determine whether there is enough evidence to warrant a follow-up inquiry by DWP staff.

Here is a breakdown of the data banks may be asked to share:

Importantly, banks are not permitted to share transactional data. They will not reveal where or how money is spent, nor will they provide special category data such as health, ethnicity or political affiliations. If a bank shares more than what the EVN outlines, they could face penalties.

Why Has the Government Introduced These Eligibility Verification Measures?

The central reason is the rising cost of fraud and error in the . When people accidentally or intentionally provide inaccurate information, it leads to overpayments that are often difficult to recover. This creates debt for claimants and financial loss for taxpayers.

I’ve followed developments in this area for years. What stands out with this bill is its focus on prevention, not punishment.

As someone who writes extensively about government policy and public spending, I believe this approach is more sustainable.

The DWP already uses data from HMRC to verify income and employment details. But it has far less insight into claimants’ assets or personal circumstances that affect other eligibility rules.

For instance, there’s currently no easy way to verify if someone’s savings exceed the threshold or if they’re living abroad for extended periods. These gaps are where fraud and error frequently occur.

The Scale of Fraud and Error in the UK Benefit System

The figures from the most recent financial year paint a compelling picture. Universal Credit, which supports millions of people across the UK, had the highest rate of overpayments. A large share of these were due to claimants holding capital above allowed limits or being abroad too long.

The following table outlines these overpayments:

These amounts are not just abstract losses. They have direct consequences on public trust and on the availability of support for others who genuinely need it. What’s more, incorrect payments can leave claimants in long-term debt if the money needs to be recovered.

Key Findings from the National Audit Office and OBR

The National Audit Office’s report, An Overview of the Impact of Fraud and Error on Public Funds, made clear recommendations for leveraging data to prevent losses.

Similarly, the Office for Budget Responsibility (OBR) validated the DWP’s estimate that this measure could save up to £940 million over five years.

Those are significant numbers, especially in the context of ongoing economic uncertainty. According to the DWP’s estimates:

These numbers are based on a gradual rollout, which gives financial institutions and DWP staff time to adapt and test the processes.

How Will the Eligibility Verification Process Work in Practice?

This system is not meant to operate in isolation or without oversight. It’s designed to function within a series of checks, both technical and human, to ensure that it’s used fairly and proportionately.

Here’s a simplified flow of the process:

If a red flag is raised, a human caseworker will always be involved. Automated systems will not make decisions that affect people’s payments or legal standing.

If further inquiry is justified, the DWP will proceed according to existing protocols, including contacting the claimant directly.

How Will the DWP Use the Information Collected?

The information collected through EVNs will help DWP determine whether there is reason to suspect that a benefit is being overpaid. It won’t be used to immediately stop payments or to accuse someone of fraud.

Instead, the DWP will follow up where appropriate. This may include requesting additional documentation, reviewing case histories or arranging interviews.

A crucial aspect of the process is that no benefit decision will be made based solely on data received from a financial institution.

Will This Affect All Benefits?

No, only a select few. Initially, the powers will apply only to:

• Universal Credit
• Pension Credit
• Employment and Support Allowance (ESA)

These benefits were chosen because they have the highest levels of capital- and abroad-related fraud and error. Other benefits may be added in future, but only if Parliament approves such a change. The State Pension is explicitly excluded and cannot be added later through regulation.

What Safeguards and Oversight Will Be in Place?

This kind of policy naturally raises questions about privacy, accountability and fairness. From what I’ve reviewed, the bill contains multiple safeguards to prevent abuse or overreach.

The following table summarises these safeguards:

These controls are significant. As a writer, I’ve often been sceptical of data-driven governance, but in this case, the emphasis on transparency and human judgement reassures me.

Which Benefits Are Initially Targeted by the Verification Powers?

The focus is on the three benefits that currently have the largest volumes of overpayments related to misreported capital or time abroad.

Another way to examine the extent of the issue is by looking at the percentage of overpaid expenditure.

The table below illustrates this:

These percentages might seem small, but when multiplied by the size of the total expenditure, they represent significant sums of money.

How Will Claimants Know If Their Account Has Been Checked?

One of the more nuanced parts of this policy is the fact that claimants will not be directly notified when their accounts are checked as part of an Eligibility Verification Notice.

The DWP’s approach is based on identifying risks or potential discrepancies before contacting the individual, to ensure any follow-up is proportionate and justified.

This lack of upfront notification has raised concerns in some quarters about transparency. From the government’s perspective, however, the intention is to avoid tipping off individuals in cases where potential fraud is suspected.

Still, the legislation makes it clear that no action will be taken without giving claimants a fair chance to explain or correct their information.

If a discrepancy is found, the DWP will initiate standard procedures which include:

• Contacting the claimant for clarification
• Reviewing additional documents if needed
• Assessing whether the issue was due to error, misunderstanding or deliberate omission

Importantly, no automatic decisions are made purely on the basis of data from a bank. Every flagged case is reviewed manually, and the claimant is brought into the process as early as appropriate.

I personally find this approach reasonable, but it does require clear communication from the DWP so claimants understand their rights.

The government will need to be proactive in reassuring the public that this system isn’t designed to punish but to ensure fairness.

I’d like to see future updates or consultations explore whether some form of anonymised annual reporting could be introduced.

That might include data such as how many EVNs were issued, how many resulted in changes to benefit payments, and what proportion were later overturned after discussion with the claimant.

How Will This Affect Financial Institutions in Practice?

While most of the attention has understandably focused on what this means for claimants, it’s also important to consider the operational impact on banks and financial institutions.

These organisations will play a central role in executing the technical side of the verification process, and that responsibility carries both logistical and legal implications.

Under the Bill, banks are legally obligated to respond to Eligibility Verification Notices within a set timeframe. Failing to comply, whether through non-response, delay or inappropriate data sharing, could result in penalties.

The legislation has taken steps to define boundaries clearly. Financial institutions:

• Can only share data outlined specifically in the EVN
• Must avoid providing transaction history or special category data
• Can request a review or appeal if they believe an EVN is inappropriate or too broad

These limitations are designed to protect both the claimant and the institution. However, implementing this at scale will require investment in training, system updates and internal processes.

Here’s a summary table of how banks will need to respond:

From my own perspective, I see an interesting balance being struck here. Financial institutions are being treated as partners, not enforcers.

Their job is to facilitate eligibility checks within a very specific framework, nothing more. But they’ll still bear the responsibility for ensuring compliance and handling data securely.

As this policy rolls out, it’s likely we’ll see ongoing collaboration between DWP and banking industry bodies to develop best practices.

The ‘test and learn’ phase is vital here, because it will allow both sides to refine processes before the policy scales up nationally.

For claimants who may worry about the implications, I’d like to stress that banks are not being asked to make judgement calls. They simply check data against a set rule and return results, no algorithms, no profiling, no opinions.

FAQs on DWP Eligibility Verification Powers

What is an Eligibility Verification Notice (EVN)?

An EVN is a formal request from DWP to a financial institution, asking them to check certain accounts against specific eligibility criteria and report limited data back.

Will DWP be able to see my transaction history?

No. Banks are forbidden from sharing transaction data under this policy. Only specific, non-sensitive account details are permitted.

Which benefits are affected by these powers?

Initially, Universal CreditLatest Universal Credit Changes That Could Impact Your Finances, Pension Credit, and ESA. Other benefits could be added in the future, but only with Parliament’s approval.

Will DWP make decisions solely based on bank data?

No. Bank data may trigger a follow-up, but any decision about your benefit will always involve a human review.

Can I be penalised if my account is flagged?

Not directly. A flagged account may lead to further inquiries, but no automatic penalty or action will occur without verification and due process.

How will DWP protect my data?

DWP is bound by UK GDPR and the Data Protection Act 2018. All shared data will be held securely and used only for the intended purpose.

What if my bank shares the wrong data?

Banks face penalties for oversharing. They can also appeal any EVN or penalty they believe is unjustified.