UK Spending Watchdog Warns on DWP Bank Account Checking Powers

The Department for Work and Pensions now has powerful new authority to require banks and other financial firms to provide selected financial information about people claiming benefits as part of efforts to reduce fraud and errors in the welfare system. The move follows the Public Authorities (Fraud, Error and Recovery) Act 2025 becoming law, giving the department these expanded powers.
Under the new rules banks will be asked to check their own data against eligibility indicators set by the department and notify officials if an account receiving certain benefits appears to fall outside the rules. These checks apply only to accounts that receive benefits such as Universal Credit, Pension Credit and Employment and Support Allowance and linked accounts that match the criteria. Claimants’ full transaction histories are not handed over to the department.
However the UK Parliament’s Public Accounts Committee has warned that the department has not fully explained how it will use these powers responsibly and proportionately. The watchdog stressed that public confidence is at risk unless clear safeguards and oversight are in place. It also highlighted longstanding issues with the department’s own error levels and called for better internal reforms alongside these new measures.
The DWP says the powers are aimed at ensuring people are paid the right amount of benefits and at recovering overpayments and that safeguards such as independent review and annual reporting to Parliament will govern how the powers are used. It has also emphasised that staff will not be given unrestricted access to bank account data and that human involvement will guide decisions following any automatic checks.