Benefits and banks: DWP eligibility verification

Introduction 

The Public Authorities (Fraud, Error and Recovery) Act 2025 (‘the Act’) contains provisions allowing the DWP to compel banks and other financial institutions to provide information about accounts receiving certain benefits (universal credit (UC), pension credit and employment and support allowance (ESA)) as part of a new ‘eligibility verification measure’ (EVM), intended to help identify incorrect benefit entitlement. The Act also allows the DWP to recover benefit overpayments directly from a person’s bank account1 and, in certain circumstances, apply to the court for a disqualification of a person’s driving licence if they have an outstanding overpayment of at least £1,000.2 

Before using these powers, the Act requires the DWP to consult on and produce codes of practice to support their use. The government has now published final versions of the DWP Direct Deduction and Disqualification from Driving Orders Code of Practice3 and the Code of Practice on Eligibility Verification Notices4 (‘the Code of Practice’). 

Publishing of the latter means the DWP is now in a position to start using its new EVM powers. So what do we know about how this might work in practice?

Eligibility verification measure 

Section 78 of the Act, commenced by the Public Authorities (Fraud, Error and Recovery) Act 2025 (Commencement No.1) Regulations 2025, lays out the EVM framework and allows the DWP to request information from banks and other financial institutions, ‘for the purposes of assisting in identifying incorrect payments of a relevant benefit.’ 

The DWP will do this by issuing an ‘eligibility verification notice’ (EVN) requesting information on accounts that meet certain ‘eligibility indicators’. Once a benefit claimant is identified via this measure, the DWP will use so-called ‘business-as-usual’ processes to determine whether further action is needed, such as suspending payment or changing a decision on entitlement.

What is an EVN?

EVNs will not request information targeting specific individuals’ accounts. Rather, they will include ‘eligibility indicators’ that institutions (eg, the bank) must use to identify accounts, and any accounts held by the same person, that receive payments of a relevant benefit and meet the eligibility criteria. Accounts can meet the criteria individually or together. At present, the relevant benefits are UC, pension credit and ESA only. But the DWP has the power to include other benefits in this list at a later date.5 EVNs will specify what information needs to be re turned in relation to these accounts, over what period, and if the information is to be returned at intervals (a ‘periodic EVN’) or as a one-off.

What are eligibility indicators, and how will banks use them? 

The government has made clear it does not intend to publish details about exactly what the eligibility indicators will be.6 However, we do know they will be based on the eligibility criteria for the relevant benefits and it seems the DWP intends to use this measure initially to identify accounts that might be over capital limits or held by those who have spent time abroad beyond the periods allowed under temporary absence rules. 

The indicator might be all accounts, either stand-alone or when combined with others held by the same person, receiving UC with a balance of over £16,000. The Code of Practice also gives the following example:

‘3.5 The ask may vary: for example, it may be that information is only returned in cases where there is a specific amount above £16,000, or it may be that DWP lowers this amount to help verify the correctness of payments where a claimant has between the lower capital limit of £6,000 and the upper capital limit of £16,000.’

For those abroad, the Code of Practice suggests evidence that someone has been abroad for too long could be in the form of ‘dates that the account has been consecutively used outside of the UK’.7 Therefore, a potential eligibility indicator could involve identifying accounts with consecutive transactions abroad for more than one month. 

It is unclear how much discretion institutions will have when it comes to interpreting the eligibility indicators and it will presumably be up to the institution exactly what process it follows to identify accounts. Potentially, some claimants may be more or less likely to have their account flagged depending on who they bank with. 

What information will be returned in response to an EVN? 

The EVN will specify what information is to be returned in relation to the accounts that meet the eligibility indicators. This may include: account details (such as sort code and account number), account holder details (such as name and date of birth), and details of how the accounts meet the eligibility indicators This may include: account details (such as sort code and account number), account holder details (such as name and date of birth), and details of how the accounts meet the eligibility indicators. 

The Act prohibits institutions from providing any information on transactions.8 This is defined as that which could identify the amount or subject matter of the transaction, or the other transaction party. Presumably, this restriction will not preclude sharing in what country a transaction has taken place. 

An EVN cannot request historical data, defined as that older than one year, but it can ask for the date on which an account satisfied the eligibility indicators – eg, the date an account balance went above £16,000.9

What accounts are in scope? 

EVNs will only return data on personal accounts held in the UK, including joint accounts, current accounts and savings and investment accounts. Given EVNs do not specifically target individuals but rather require institutions to trawl, it is inevitable that accounts not belonging to benefit claimants but receiving payments will be flagged – eg, appointees and landlords receiving direct rent payments. 

The DWP has made clear in the Code of Practice10 that as soon as it’s known that the account holder is not the same as the benefit claimant, any information received in relation to this account will not be used further and will be destroyed in line with DWP data management policies. 

‘3.39 On receipt of EVM information, DWP will use a matching process to identify whether the account holder identified by the financial institution and the benefit claimant in question are the same person. If DWP identifies that the data received from the financial institution does not directly relate to the claimant, the information will not be shared further and will not be used by DWP operational teams. Once DWP determines that the information no longer serves a purpose (eg, after having confirmed the information is not relevant), it must be securely destroyed in line with DWP’s Information Management Policy.’ 

How will information returned by an EVN be used? 

Once it’s confirmed the account holder is indeed the claimant, the DWP will use ‘business-as-usual’ processes to determine whether further action is needed. When considering the impact of these new measures on claimants, it is easy to see this is where issues will arise. 

Both the Act and Code of Practice are clear that the DWP cannot suspend payment of benefit, nor make a decision regarding entitlement, without considering all information DWP has on the claimant.11 On other potential sources of information, the Code of Practice states: 

‘3.61 Examples of further relevant information that DWP may consider before determining whether to take further action could include: (i) the information the claimant has previously told DWP about how much capital they have; (ii) the presence or absence of a capital disregard; (iii) whether the claimant has informed DWP of relevant overseas travel. This is not an exhaustive list and will vary depending on the circumstances of each individual claim.’ 

The Code of Practice makes specific reference to disregards.12 It does not acknowledge any other factors relevant for calculating how much capital a claimant actually has for the purposes of working out benefit entitlement. For example, it does not make reference to the fact claimants could be holding capital in trust for others, nor to the fact that income from benefits and earnings only counts as capital after the period they’ve been received in respect of. Given the EVM is merely a data-gathering measure relying on DWP processes to accurately determine entitlement, this is unsurprising. However, it is nonetheless concerning that no explicit acknowledgement is made of the fact capital must actually be calculated in line with the rules. 

In addition, the Act does not require further enquiries be made. Some parts of the Code of Practice suggest this will happen, and to do so would appear in line with what we know about existing UC review practices, but the process is not clear. It would be concerning if decisions on suspension and entitlement were made without engaging with the claimant first. 

The Social Security Act 1998 provides the DWP with the power to suspend payments in specific circumstances (section 21), or to request information and then suspend if claimants fail to provide this (section 22). Given business-as-usual processes would appear to use both powers, it’s not known which approach the DWP will favour when it receives information from an EVN. Presumably, claimants will be at risk of both. 

Challenging decisions made using information from an EVN 

Claimants have the same dispute rights against benefit decisions as normal. If an unfavourable decision is made with respect to their entitlement, they can submit a mandatory reconsideration and proceed to appeal if necessary. If a decision is made to suspend payment, claimants are not able to appeal, but can try to negotiate the reinstatement of payments, citing hardship if appropriate, or challenge via judicial review. Claimants in this situation should seek advice. 

Will a claimant always know when their account has been flagged? 

No. Account holders will not be made aware of the fact an EVN has been issued to their bank and therefore that their account might be within scope. Presumably this would undermine efforts to detect fraud. Furthermore, if the DWP determines that no further action is needed, it appears unlikely to advise claimants of this: 

‘4.14 DWP will not inform account holders every time that a financial institution shares information with DWP. However, DWP will make contact with claimants as necessary where action is needed to verify entitlements and ensure payments are correct. In such cases, DWP will inform claimants about the information which has led to their being contacted. For some claimants, this contact may not be necessary, for example because DWP may already hold information about their claim and is satisfied the payments made are accurate and correct data minimisation.’ 

What about safeguarding vulnerable claimants? 

The Code of Practice does not detail any safe guarding measures specific to the EVM measure. This issue was raised by stakeholders as part of the consultation and in response the DWP confirmed: 

‘As EVM is a data-gathering measure that feeds into business-as-usual processes, no additional safeguards have been included in the Code of Practice […] If DWP considers that, following receipt of EVM information, there is a doubt about a claimant’s entitlement to benefit, payment of the benefit will not be suspended until the issues have been considered in line with DWP’s existing suspension practices. These include hardship considerations.’13

This may not offer much reassurance. As part of the consultation on the codes of practice, various respondents raised concerns about the DWP’s existing safeguarding practices and the fact more people will be subject to these processes. 

Although the independent reviewer will assess the efficacy of the EVM as a measure to prevent incorrect payments, they will not be assessing the DWP’s business-as-usual processes. 

Comment 

There is concern that these measures will mean some claimants are caught up in unnecessary fraud investigations or reviews, risking their benefits being incorrectly suspended or even terminated. The government is relying on the efficacy of existing business-as-usual practices despite the EVM greatly expanding the scope of claimants subject to these processes. 

CPAG’s Early Warning System regularly receives reports about benefits being suspended for long periods of time, a decision which cannot be appealed, and incorrect decisions being made following UC review processes. If claimants experience difficulties due to information received in response to an EVN, CPAG would be interested in hearing about these case studies at [email protected] or Tell us about your case.