DWP Launches First Eligibility Verification Notices Under New Fraud Powers
The Department for Work and Pensions (DWP) has begun issuing Eligibility Verification Notices (EVNs) to banks and financial institutions as part of its new fraud-fighting powers, with the first notice sent on 26 October 2026. The measure, introduced under the Public Authorities (Fraud, Error and Recovery) Act 2025, marks the start of a controlled test-and-learn phase rather than a full-scale rollout, according to the DWP.
Banks are now required to check accounts receiving specified benefits against eligibility indicators supplied by the DWP and report limited information where potential discrepancies are identified. The checks currently apply to Universal Credit, Pension Credit and New Style Employment and Support Allowance (New Style ESA). State Pension is explicitly excluded and cannot be added through regulations, though pensioners remain subject to other existing benefit checks.
Crucially, the DWP cannot see full bank statements under the new regime. Banks may disclose account numbers, sort codes, account holder names, details of linked and joint accounts, balances and how an account meets the relevant indicator. They may also provide the dates of transactions that took place abroad. However, full statements, general transaction histories and details of individual purchases are off-limits. Institutions that fail to comply with the legal requirements, including limits on sharing prohibited information, may face penalties.
Limited Data Sharing Raises Privacy Questions
The checks can reach beyond the individual claimant. Because linked and joint accounts may be included, someone who does not claim the benefit could have information shared if they hold an account linked to a relevant one. The DWP says information not directly relevant to a claim will be destroyed in line with its information management policy, and the rules do not mean every account belonging to a claimant's family or household is automatically covered.
Savings Rules and the £16,000 Threshold
Under Universal Credit rules, claimants generally cannot have more than £16,000 in money, savings and investments and remain eligible. Savings between £6,000 and £16,000 can reduce payments, while certain types of capital may be disregarded. The £16,000 limit applies specifically to Universal Credit rather than every benefit covered by the checks.
Government Abandons Earlier Open Banking Proposal
The new EVM system replaces an earlier proposal that would have allowed the DWP to check the savings of people applying for Universal Credit before payments were made. Chancellor John Healey has dropped the previous plan introduced by Rachel Reeves when she was chancellor, according to reports in the Telegraph. The original approach would have relied on claimant consent through Open Banking and could not be used in every Universal Credit claim.
The decision to abandon the earlier approach could cost taxpayers £5 million this year and £10 million next year because of potentially higher levels of undetected fraud, the Telegraph reported. A DWP spokesperson said: "This Government is determined to crack down on fraud and error and protect taxpayers' money. The previous Open Banking proposal relied on claimant consent and could not be used in every Universal Credit claim."
The department confirmed that the replacement Eligibility Verification Measure will require banks and financial institutions to flag accounts that meet specified criteria, helping identify potentially incorrect payments. The DWP estimates the measure will save £1.2 billion by 2030/31.
Fraud and Error in the Benefits System: The Stakes
The new checks come as the DWP published its latest Fraud and Error in the Benefit System report for the 2025/26 financial year, revealing the scale of the challenge. Universal Credit overpayments were estimated at 10.5 per cent (£9.5 billion) in the year ending April 2026, continuing to account for the largest proportion of benefit overpayments. By comparison, State Pension recorded the lowest overpayment rate at 0.2 per cent (£230 million), though historic Home Responsibilities Protection errors remained the biggest reason for State Pension underpayments linked to National Insurance contribution records.
The DWP has confirmed it will review five major benefits for fraud and error during the 2026/27 financial year, with findings due to be published in May next year. The benefits included in the latest review programme are Universal Credit, Housing Benefit (pension age, non pass-ported cases), Pension Credit, State Pension and Personal Independence Payment (PIP).
Universal Credit Remains Primary Focus
Universal Credit is expected to remain one of the main areas of focus after the latest report showed it continued to account for the largest proportion of benefit overpayments. The DWP's estimate of £9.5 billion in Universal Credit overpayments underscores the financial pressure on the welfare system and the political imperative to demonstrate action on fraud.
The new EVM checks are designed to identify potential fraud and incorrect benefit payments after claimants have started receiving benefits, rather than before, as the abandoned Open Banking proposal would have done. Banks will conduct checks on welfare claimants' accounts and report suspicious findings back to the DWP. Critics have suggested the change could lead to higher levels of fraud going undetected, but the government argues the new system is more comprehensive because it does not rely on claimant consent.
Test-and-Learn Phase Signals Cautious Rollout
The DWP says the initial phase of the EVM will assess systems, data quality, operational impacts and customer outcomes before the checks expand. This cautious approach reflects the sensitivity surrounding the powers, which have been characterised by some critics as "snooping" on bank accounts. The government has sought to reassure claimants that the checks are targeted and limited in scope.
What Happens If an Account Is Flagged
If an account is flagged as meeting an eligibility indicator, the DWP will receive limited information and can then investigate further through existing channels. The department has not specified how many notices will be issued during the test phase or what criteria will trigger a flag, but the focus is on identifying discrepancies between the information held by banks and the eligibility criteria for the specified benefits.
The checks are part of a broader government effort to crack down on fraud and error, which costs the taxpayer billions of pounds annually. The DWP's fraud and error report shows that while fraud and error remain significant, the department is also under pressure to ensure that legitimate claimants are not adversely affected by the new measures.
Broader Implications for Welfare and Privacy
The introduction of the EVM represents a significant shift in how the DWP uses financial data to verify benefit eligibility. Unlike the abandoned Open Banking proposal, which required claimant consent, the new system imposes a legal obligation on banks to check accounts and report limited information. This raises questions about privacy and the extent to which financial institutions should be enlisted in welfare enforcement.
The DWP's approach also reflects a wider trend in government of using data matching and third-party information to detect fraud and error. Similar measures are already in place for other government departments, and the EVM is expected to be closely watched by privacy advocates and welfare rights organisations.
Savings and Accountability
The government estimates the EVM will save £1.2 billion by 2030/31, a figure that will be scrutinised as the test phase progresses. The abandoned Open Banking proposal was projected to save £200 million a year, according to Rachel Reeves when she announced it. The new system's savings are expected to be higher because it covers all Universal Credit claims, not just those where consent is given.
As the test-and-learn phase unfolds, the DWP will need to demonstrate that the checks are effective, proportionate and fair. The department has committed to publishing findings from the fraud and error review in May 2027, which will provide further insight into the impact of the new measures.
For now, claimants on Universal Credit, Pension Credit and New Style ESA should be aware that their banks may be required to check their accounts against DWP criteria and report limited information. Full statements and transaction histories remain private, but balances and linked account details may be shared if an account is flagged. The DWP maintains that the checks are a targeted tool to protect public money, not a blanket surveillance programme.
As the government continues to grapple with the fiscal pressures of an ageing population and a strained welfare budget, the balance between fraud prevention and privacy will remain a contentious issue. The EVM is a key part of that debate, and its rollout will be watched closely by all sides.
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