The Department for Work and Pensions (DWP) now has legal powers to verify benefit eligibility by accessing specific financial data under the Public Authorities (Fraud, Error and Recovery) Bill.
This Eligibility Verification Measure is designed to reduce fraud, prevent overpayments, and ensure claimants meet benefit criteria using existing banking data.
Key answer points:
- Notices require banks to check accounts against savings thresholds and benefit criteria.
- Only account details and match indicators can be shared, not transactions or sensitive data.
- Applies to Universal Credit, Pension Credit, and ESA; excludes State Pension.
- Oversight includes annual reports to Parliament and a published Code of Practice.
- All decisions involve a human caseworker, not automated action.
- Banks face penalties for non-compliance or oversharing.
- Estimated savings of up to £940 million over five years.
- Latest figures show high fraud/error rates in capital and abroad claims.
What Is the DWP’s New Eligibility Verification Measure All About?
The Department for Work and Pensions’ new Eligibility Verification Measure is part of the Public Authorities (Fraud, Error and Recovery) Act, and it gives DWP a statutory power to obtain specific information from banks and financial institutions to verify whether benefit claimants meet the eligibility conditions for certain benefits.
If you receive benefits like Universal Credit, Pension Credit or Employment and Support Allowance (ESA), this measure introduces a new process where your financial circumstances can be verified directly through data checks.
The stated objective behind the measure is to reduce fraud, error and inaccurate payments in the social security system. Traditionally, DWP has relied on data from HM Revenue & Customs (HMRC) to verify employment and income information.
This works well for earnings and payroll data, but other key eligibility criteria, such as savings, investments or periods spent abroad, are typically self‑declared by claimants. Data from financial institutions, when available, can help fill gaps in the current verification process.
I spoke with a government professional who has been involved in the policy design for this Bill. They explained the policy intent clearly:
“The verification measure is not designed to cast suspicion over all claimants but to ensure that data gaps do not lead to persistent incorrect payments. The guiding principle is early detection of error, whether innocent or deliberate, to avoid compounding issues such as debt accumulating for claimants and unnecessary costs for the taxpayer.”
From my perspective, this measure reflects a shift towards proactive verification using data that already exists in the financial system. It is a recognition that for some aspects of benefit entitlement, self‑reporting has limitations.
By harnessing existing data in a controlled way, DWP says it can deliver more accurate benefit payments and reduce the frequency and scale of overpayments. The fact that the policy is written into legislation indicates the Government’s commitment to data‑driven decision making in social security administration.
How Does the Eligibility Verification Process Work in Practice?
The key mechanism introduced by the legislation is the Eligibility Verification Notice. These notices allow DWP to require certain information from banks and financial institutions. Notices are sent to specified institutions and outline what data they must check and report back.
Eligibility Verification Notices contain eligibility indicators, which are criteria based on the rules governing specific benefits. For example, Universal Credit includes a savings threshold: a claimant with savings above £16,000 is not eligible.
The eligibility indicators related to capital thresholds are used by banks to check whether accounts receiving benefit payments appear to align with the claimant’s reported circumstances.
Eligibility Verification Notices can only request specific types of information. The legislation is explicit about both what can be obtained and what cannot be obtained. The limitations are strict to protect privacy and prevent data misuse.
Table 1 below summarises the core categories of information that banks and other financial institutions can provide in response to a notice, and equally important, the categories of information that they are prohibited from sharing.
Key Eligibility Verification Information Requirements
| Allowed Information from Banks and Financial Institutions | Not Allowed to Share |
| Account sort code and number | Transaction details (what you bought or spent) |
| Account holder’s name and date of birth | Special category data (health, ethnicity, religious beliefs, political opinions) |
| Whether the account meets specific eligibility indicators | Other personal data not directly linked to eligibility criteria |
| Linkage to a benefit‑receiving account | Other financial accounts not connected to the benefit payment |
Banks are required to match accounts in receipt of a specified benefit with the indicators from the notice. If an account is identified as meeting certain flagged criteria (such as exceeding the savings threshold), it is reported to DWP. However, whether this leads to further inquiries depends on how this information aligns with other data DWP already holds.
“Information obtained through Eligibility Verification Notices is intended as a starting point for review, not an endpoint for decision making. DWP officials will assess the information in context, and human intervention remains essential before any action on eligibility is taken.”
This insight, shared by a senior policy adviser, emphasises that data is used to inform further inquiry and not to make automatic benefit decisions.
The legislation clearly states that personal data must be handled in accordance with the Data Protection Act 2018 and UK GDPR. This means that even though data is exchanged, it must be stored securely and used strictly for its intended purpose.
Which Benefits Will Be Monitored First Under These New Rules?
The Eligibility Verification Measure will initially be used for three specified benefits:
- Universal Credit
- Pension Credit
- Employment and Support Allowance (ESA)
The choice of these benefits for the initial rollout reflects where DWP currently identifies the highest levels of incorrect payments due to capital‑related issues and other eligibility concerns.
Importantly, State Pension is excluded from the scope of this measure and cannot be added by secondary legislation. Expanding the range of benefits covered by the measure would require affirmative approval by Parliament, meaning that any future changes would be debated and agreed in primary legislation.
What Safeguards and Oversight Has the DWP Put in Place?
There has understandably been public concern about data sharing between government and financial institutions. In response, the legislation embeds multiple safeguards designed to protect claimants, restrict data usage and ensure accountability.
Table 2 below shows the main categories of safeguards built into the measure.
Table 2: Safeguards and Limitations in the Eligibility Verification Measure
| Safeguard or Limitation | Description |
| Independent Oversight | An independent person or body will review and report annually to Parliament on how the powers are exercised. |
| Code of Practice | DWP must consult on and publish a Code of Practice detailing how notices will be issued and handled. |
| Purpose Limitation | Notices can only be issued to identify incorrect payments of specified benefits. |
| Restriction to Defined Institutions | Only banks and financial institutions specifically outlined in legislation can be subject to notices. |
| Benefit Limitation | Initially limited to Universal Credit, Pension Credit, ESA; State Pension is excluded. |
| Data Restrictions | Transaction details and special category data cannot be shared. |
| Penalty Framework | Penalties apply if institutions fail to comply or share prohibited data. |
| Review and Appeal | Institutions can request a review or appeal a notice to a tribunal. |
These safeguards are core to how the verification measure will operate. I asked a government professional why these safeguards were considered essential, and they replied:
“The purpose of the measure is targeted and specific. It is not an open‑ended data grab. The restrictions on the type of data that can be shared and the oversight mechanisms are there to ensure that the measure is proportional and respects individual privacy rights while improving accuracy in benefit payments.”
From my perspective, the combination of statutory safeguards and oversight is reassuring. Ensuring that independent reporting to Parliament occurs annually creates visibility into how notices are being used, while the Code of Practice offers clarity to both claimants and institutions on what to expect.
Another important protective element is that no decisions regarding benefit eligibility will be made based solely on information received through verification notices. Human intervention remains central; data is an input, and trained DWP staff will interpret it alongside other evidence.
Will This Change Mean My Benefit Payments Could Stop Suddenly?
A common concern is whether verification through financial data might lead to sudden changes in benefit status. It is important to understand the process flow here. Information obtained through a notice may indicate an area where further inquiry is needed, but it does not automatically terminate or adjust benefits.
For example, if a bank reports that an account receiving Universal Credit appears to exceed the capital limit, DWP will use that information as a trigger to examine the case more closely. They may contact the claimant for clarification, review additional evidence, and consider any allowable exceptions or circumstances that explain the discrepancy.
What I find reassuring from the policy discussions is that verification is a tool for informed decision making, not an automatic enforcement mechanism. Human decision makers still assess the overall facts before any change to a claimant’s award is made.
What Are the Penalties for Banks That Overstep the Mark?
Banks and other financial institutions are required to respond to Eligibility Verification Notices within a specified timeframe and within the scope of the information the legislation permits.
If an institution fails to respond, or if it shares information that is outside the permitted categories (for example, transaction data or other prohibited personal data), it may receive a penalty notice.
Penalties are designed to ensure compliance without encouraging institutions to withhold legitimate information out of caution. The sanctions act as a balancing mechanism to protect data recipients while maintaining the integrity of the verification process.
Can the DWP Use This Data for Other Benefit Checks Too?
Yes, information obtained from verification notices can trigger further reviews for other benefits. Suppose verification under Pension Credit suggests that a claimant’s financial position is inconsistent with entitlement criteria. In that case, DWP may also check eligibility for other linked benefits, such as Housing Benefit.
Even in these scenarios, decisions about eligibility remain subject to human review. The data serves to highlight potential issues that may require further investigation rather than acting as conclusive evidence on its own.
What Are the Expected Savings and Overpayments Identified by This Measure?
Independent analysis by the Office for Budget Responsibility (OBR) has validated Government estimates that these verification powers could deliver significant savings. Estimates suggest up to £940 million could be saved over a five‑year period once the measure is fully implemented, with around £500 million saved per year at maturity.
DWP also projects that the measure could identify between 50,000 and 100,000 overpayments per year, particularly in benefits with capital‑related or abroad‑related error components.
The tables below show the current latest figures on fraud, error and incorrect payments for the benefits covered by the new measure.
Table 3: Monetary Value of Fraud and Error by Benefit (£m)
| Benefit | Total Overpaid (£m) | Capital‑Related (£m) | Abroad‑Related (£m) |
| Universal Credit | 6,460 | 1,020 | 250 |
| Pension Credit | 520 | 200 | 80 |
| ESA | 430 | 180 | 10 |
Table 4: Percentage of Fraud and Error by Benefit
| Benefit | Total (%) | Capital‑Related (%) | Abroad‑Related (%) |
| Universal Credit | 12.4 | 2.0 | 0.5 |
| Pension Credit | 9.7 | 3.7 | 1.5 |
| ESA | 3.4 | 1.4 | 0.1 |
Looking at these figures in context, the scale of incorrect payments (both in absolute terms and as a proportion of total benefit expenditure) demonstrates why policymakers are focusing on capital‑related eligibility criteria.
Savings and investments, when not accurately reported, contribute a sizeable portion of the overall error.
From my own analysis, it seems clear that targeted verification focusing on the largest areas of error has the potential to improve overall system accuracy. However, it relies on strong implementation practices and clear communication with both claimants and financial institutions.
My Perspective on the DWP’s Eligibility Verification Measures
Having reviewed the factsheet from DWP and spoken with policy professionals involved in the Bill, I believe this approach attempts to strike a balance between reducing error and protecting claimant rights. It clearly limits the data that can be shared, emphasises oversight and requires human involvement in benefit decisions.
At the same time, I recognise that some claimants and members of the public may feel uneasy about any data sharing between government and financial institutions.
From my perspective, clarity about what the process is and is not will be essential in building public confidence, and that is why I have tried to explain the parameters and safeguards here in straightforward terms.
Frequently Asked Questions
How soon will these rules start?
The measure will be phased in gradually, initially focusing on a test and learn rollout to help institutions adjust.
Will all banks and credit unions be covered?
Only those defined under primary legislation will be subject to notices, essentially major banks and financial institutions.
Does this affect State Pension?
No. State Pension is exempt and cannot be added to Eligibility Verification powers.
Could my transaction history be accessed?
No. The legislation explicitly excludes transaction data.
Who oversees how DWP uses these powers?
An independent reviewer will report to Parliament annually.
Are people assumed guilty if their accounts are identified?
No. The process is about indicators for further review, not assumptions of guilt.
Can I appeal a DWP decision based on this data?
Yes. Like other benefit decisions, you can request a review and appeal through established processes.
