With a background in financial journalism across national titles, Ruby loves helping people take control of their money and specialises in pensions, tax, banking and benefits.
This month, the Department for Work and Pensions (DWP) gains new powers to require banks to check whether benefit claimants meet eligibility rules.
The changes are part of the Public Authorities (Fraud, Error and Recovery) Act, which received Royal Assent in December 2025.
The legislation also gives DWP powers to recover certain benefit debts directly from bank accounts and apply to courts to disqualify people from driving if they persistently fail to repay.
According to DWP figures, benefit fraud and error led to £9.5bn of overpayments in 2024-25, roughly 3.3% of total benefit expenditure. The government expects the new powers to save £1.5bn by 2030.
Here, Which? explains how the new powers will work, who could be affected and what safeguards are in place.
Previously, the DWP used HMRC data to automatically verify income, but it relied on claimants to accurately report their savings and the amount of time they spent abroad. If misreported, a claimant may end up receiving more money than they are entitled to.
The new powers are known as Eligibility Verification Measures (EVMs). These require banks and other financial institutions to use its own data to identify bank accounts held by people claiming certain DWP benefits that may not meet specified eligibility rules.
The government will provide banks with a list of ‘eligibility indicators’ to make these checks, and while the full list will not be published, the DWP has shared two examples, which are:
Banks will need to screen any account that receives DWP benefit payments, as well as other accounts with that same bank, to see if there are any mistakes or signs of fraud.
If a bank identifies a potential issue, it will inform the DWP of the account holder’s name and date of birth, as well as basic account details such as the sort code and account number. Once the DWP receives a flag, it will apply its standard investigative procedures to decide whether benefit payments need to be adjusted or recovered.
No decisions about benefit entitlement will be made based on this information alone, and the new powers will not give the DWP direct access to bank account or financial account data.
The DWP says it is working with the 15 biggest banks in the UK, which include Barclays, HSBC, Halifax, NatWest, Santander and others.
The DWP will also have powers to recover certain unpaid benefit debts directly from bank accounts through a Direct Deduction Order (DDO).
Money could be taken in regular instalments or as a lump sum, but safeguards must be followed first.
Before an order is issued, the DWP must review at least three months of bank statements to assess affordability and verify that the deductions will not cause financial hardship or prevent the individual from meeting essential living costs.
Alongside this, people must also be notified in advance and given at least a month to respond or object before the DWP contacts their bank to set up a DDO.
The DWP can also apply for a court-ordered driving disqualification to recover debts of at least £1,000 from former benefit recipients who have failed to repay without a reasonable excuse.
The DWP says it will use this power as a last resort, after reasonable attempts to recover the debt and agree a payment plan have failed.
It's important to note that the DWP cannot revoke licences directly, the court must first issue a 'suspended disqualification order' with set payment terms. This means the person can continue driving, but has to follow the payment terms set by the court.
If they keep up with the payments, the suspension remains in place. However, if they miss more than one instalment or fail to make the final payment without a valid excuse, the DWP can apply for an immediate disqualification order banning them from driving for up to two years.
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These new rules only apply to three benefits:
However, the law leaves open the possibility of additional benefits being added. The state pension is 'explicitly excluded' from the power and can't be added by regulations.
These powers are only for people who have stopped getting benefits and still owe money. They cannot be used against anyone who is currently receiving DWP benefits.
The legislation includes safeguards designed to protect claimants:
Every case flagged by a bank must be reviewed by a DWP officer before any action is taken. Banks aren't allowed to share full bank statements or detailed information about how you spend your money.
Banks are also banned from sharing sensitive personal data, such as information about your race, religion or political views, and can face penalties if it shares more information than it is allowed to.
Any data used must be handled in line with UK GDPR and the Data Protection Act 2018. The information can't be used to presume that a claimant is guilty of fraud and can only be used to verify benefit entitlement.
There will also be independent oversight of the legislation, with an independent reviewer required to report annually on how the powers are used.
If you believe the DWP has made a mistake or wrongly flagged your account, you have the right to challenge the decision.
In limited circumstances, the DWP can apply to a court to suspend someone’s driving licence if they persistently refuse to repay a benefit debt of £1,000 or more, despite having the means to do so.
This is intended as a last resort and would not apply where a licence is essential for work or caring responsibilities. Any disqualification would remain in effect until the debt is repaid and wouldn't result in penalty points or a criminal record.
You cannot lose your licence if you need it for work, caring for someone, or other essential daily needs.
The court must also give you a manageable payment plan first, and you can carry on driving as long as you keep up with the payments. If this payment plan is not manageable for your personal circumstances, your licence cannot be taken away.
Finally, this is only used to collect the money owed. It will not give you penalty points on your licence or a criminal record.
If the DWP identifies a benefit overpayment, it will usually follow this process:
Find out more: pension credit explained.
