The DWP’s plan to use banks to spot benefit claimants who may not be entitled to their payments is slowly moving from paper to practice. The department says the rollout is going well and a trial phase with banks is due to start this year.
At the same time, a separate set of debt-recovery powers is being switched on this month, including the power to take money straight from some people’s bank accounts.
There’s a lot of alarming talk about “bank spying” online, so here’s a calm look at what is actually happening, who it affects, and what it doesn’t do.
Where the bank checks stand right now
The power comes from the Public Authorities (Fraud, Error and Recovery) Act 2025, which became law in December 2025. The part that deals with banks is called the Eligibility Verification Measure.
Here’s how it works. The DWP sends a bank an “eligibility verification notice”. The bank then runs its own checks on accounts that receive certain benefits and tells the DWP which ones appear to break the rules. A simple example is a Universal Credit claimant whose savings have gone over the £16,000 limit.
The final rulebooks for how this must be done, known as codes of practice, have now been published. The DWP says it is making good progress and will begin a “test and learn” phase with a small number of banks this year, before slowly bringing in the rest. The government’s own savings estimates for this part of the law run to 2029-30, which gives a sense of how gradual the rollout is meant to be.
Who’s covered, and who isn’t
For now, the checks can only be used on accounts that receive one of three means-tested benefits:
- Universal Credit
- Pension Credit
- Employment and Support Allowance (ESA)
The State Pension is not included. If the State Pension is your only DWP payment, these checks don’t apply to you.
Could PIP or Carer’s Allowance be next? That question got fresh attention recently after Phil Cotter, chief executive of the compliance firm SmartSearch, told WalesOnline that the checks could in principle stretch to other benefits where money, identity or residency matter. He named Child Benefit, Carer’s Allowance, Disability Living Allowance and PIP as examples.
It’s important to be clear about what that is: an industry expert’s view of what’s possible, not a DWP plan. The law does allow other benefits to be added later, but only with Parliament’s approval. Cotter himself argued that any expansion should wait for evidence from the trial, and that the checks first need to prove they are accurate and fair.
What banks will and won’t tell the DWP
This is the part that most people worry about, so it’s worth being precise. The DWP does not get access to your bank account, and it can’t browse your spending.
If an account is flagged, the bank can share only limited details:
- Your name and date of birth
- The sort code and account number
- How the account met the DWP’s criteria, for example the date your balance went over £16,000
Banks can’t hand over statements or transaction details, and they can be fined for sharing too much. A notice also can’t ask for records more than a year old.
A flag is not a decision. A DWP officer has to review every case before anything happens, and no one should have their benefits stopped just because their account was flagged. If you think you’ve been wrongly flagged, you can challenge the decision.
The debt powers that are switching on now
The same law gave the DWP new ways to recover money people owe it, and these are much closer to home. They came into force on June 24, 2026, and the DWP is rolling out enforcement gradually from this month, October 2026.
These powers are aimed at people who have left the benefit system but still owe money and won’t agree to repay it. Before, the DWP could usually only recover debts from ongoing benefit payments or from wages through PAYE. Someone off benefits and not in a PAYE job was hard to reach.
Now the DWP can:
- Take money directly from a bank account using a direct deduction order, without first going to court
- Ask a court for a driving ban in the most serious cases
There are limits on the driving ban. The debt must be at least £1,000. No one can be banned if they genuinely need their licence, for example for work or caring. And any ban is suspended as long as the person sticks to an agreed repayment plan.
The DWP has been writing to people with old debts, and says getting in touch and agreeing an affordable plan avoids these powers altogether.
What you should do now
If you’re on Universal Credit, Pension Credit or ESA, there’s nothing you need to sign up for or send in. A few simple habits will keep you on the right side of the rules:
- Report changes quickly. Savings going up, a new partner moving in, or time spent abroad can all affect your claim. Tell the DWP when it happens, not months later.
- Know your savings limits. For Universal Credit, savings over £6,000 start to reduce your payment, and over £16,000 you usually can’t get it at all. That includes money in all your accounts, not just the one your benefit is paid into.
- Don’t ignore DWP letters. If you’re asked for information or bank statements, reply by the deadline.
- If you owe the DWP money, contact them now to agree a repayment plan. Free, confidential debt advice is available from services like StepChange, National Debtline and Citizens Advice.
And be careful with scams. The DWP won’t text or email asking for your bank login details to “verify” your account under these new rules.
Sources: GOV.UK: DWP Eligibility Verification factsheet, GOV.UK: DWP debt recovery powers announcement