DWP granted powers to ask banks to monitor certain customers

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3 days ago

Labour's new Fraud, Error and Debt Bill sits at the heart of the Department for Work and Pensions' efforts to tackle benefit fraud and will grant fresh powers to the department enabling them to seek information from claimants' bank accounts for various purposes.
The Fraud, Error and Recovery Bill is set to take effect from 2026, with the provisions being rolled out to safeguard a total of £1.5billion in taxpayers' money over the subsequent five years, reports WalesOnline.
The legislation aims to target benefit fraudsters.
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These fresh powers have been brought forward as part of a suite of measures Labour claims will constitute the "biggest fraud crackdown in a generation."
Further particulars have now emerged regarding the DWP's plans to closely monitor individuals' bank accounts.
Under the changes, benefit cheats could face driving bans lasting up to two years if they reject all chances to repay money they owe.
Currently under consideration in the House of Lords, additional details about how these powers will operate have been disclosed by Baroness Maeve Sherlock, a minister of state for the DWP.
The principal power that will allow the DWP to request banks share financial information with its officials is termed the Eligibility Verification Measure.
The DWP will be able to collect information from additional third-party organisations such as airlines to verify whether people are claiming benefits from overseas and potentially breaching eligibility requirements.
The financial department will not have direct access to the bank accounts of millions of people receiving means-tested benefits including Universal Credit, Pension Credit and Employment and Support Allowance.
The Department for Work and Pensions will flag individuals who may have breached the eligibility criteria for means-tested benefits, such as the £16,000 income threshold for Universal Credit.
Should someone be flagged, the department will then examine that claimant to avoid possible overpayments and potential fraud cases.
The legislation only permits banks and other financial institutions to share restricted data and prohibits the sharing of transaction data. This means DWP will not be able to see what people are spending money on.
A DWP factsheet states: "Any information shared through the Eligibility Verification Measure will not be shared on the presumption or suspicion that anyone is guilty of any offence.
"Banks and other financial institutions could receive a penalty for oversharing information, such as transaction information."
Baroness Sherlock explains that the information the institution can be asked to share includes details about the account holder, including their name and date of birth.
Officials can also request the bank account's sort code and account number, as well as particulars about how the account meets eligibility requirements.
Ministers have stated that these new powers are being introduced to verify an individual's eligibility for benefits based on their financial situation.
Baroness Sherlock has outlined a "phased approach" over 12 months, initially working with a select few banks.
Drawing from the experience of HMRC and the Child Maintenance Service, she estimates that the DWP will issue between 5,000 and 20,000 Direct Deduction Orders annually.
A spokesperson for the DWP told The Independent: "Our Fraud, Error and Recovery Bill includes an Eligibility Verification Measure which will require banks to share limited data on claimants who may wrongly be receiving benefits – such as those on Universal Credit with savings over £16,000.
"As well as tackling fraud, the new powers will also help us find genuine claim errors sooner, stopping people building up unmanageable debt.
"This measure does not give DWP access to any benefit claimants' bank accounts."