New ‘eligibility verification’ could have banks reporting to DWP on benefit claimants

The Department for Work and Pensions has unveiled the new 'Eligibility Verification' measures which will require banks to help monitor benefit claimants to cut down on fraud

Banks may soon be keeping a closer eye on benefit claimants' accounts and reporting their findings to the Department for Work and Pensions (DWP), but officials are quick to claim that only "very minimal information" will be shared. On October 8th, the DWP disclosed plans to integrate banks into the welfare system as part of a crackdown on benefit fraud.

Financial institutions will be required to provide insights to the DWP upon request during investigations of suspected overpayments. Work and Pensions Secretary Liz Kendall informed Parliament on Tuesday about the new 'Eligibility Verification' measures, which will compel banks to scrutinise data on benefit claimants and report back to DWP investigators.

The Fraud, Error and Debt Bill is set to grant new powers to the DWP, including the mandate for banks to aid in detecting fraudulent claims. The Secretary stated: "Through our Eligibility Verification measure, (the DWP will) require banks and financial institutions to examine their own data sets to highlight where someone may not be eligible for the benefits they are being paid. This will help DWP identify incorrect payments, prevent debts from accruing for the claimant and help identify where there may be fraudulent activity. Banks will only share very minimal information, and this will only be used by DWP to support further inquiry, if needed, into a potential overpayment."

The department has confirmed that the new measures won't allow investigators direct access to claimants' bank accounts to monitor how they spend benefit payments, and it won't be applied to state pensions. The new measures are designed to help officials detect when eligibility criteria aren't being met, both intentionally and unintentionally, which can prevent innocent claimants from unknowingly accumulating debt.

The Bill is projected to save £1.6 billion over the next five years in an effort to curb benefit fraud and recoup money lost to overpayments while still safeguarding claimants who require assistance. The Secretary pointed out that some of the DWP's powers to combat benefit fraud are no longer suitable as they haven't been updated in over 20 years.

Some of the new powers provided by the Bill include:

• Greater control over investigations into criminal gangs through search and seizure.
• The ability to modify the penalty system to justly punish fraudsters.
• Enhanced debt recovery capabilities.