15 Major Banks in the Crosshairs as New Law Targets Benefit Overpayments
The Department for Work and Pensions (DWP) is ramping up investigations into benefit overpayments, now armed with the power to scrutinise bank accounts of people on four key benefits. New legislation, enacted this month, enables the DWP to access limited banking data from 15 leading banks and financial institutions to hunt down fraud and ineligible claims.
Which Benefits and Banks Are Affected?
The crackdown targets claimants on means-tested benefits including Universal Credit, Pension Credit, Employment and Support Allowance (ESA), and Jobseeker’s Allowance (JSA). Accountants warn that even temporary bank balance spikes, such as gifts or transfers, could trigger investigations.
The 15 banks sharing data with the DWP are:
- Bank of Scotland
- Barclays
- Halifax
- HSBC
- Lloyds Bank
- Metro Bank
- Monzo Bank Limited
- NatWest
- Nationwide
- Santander
- Starling Bank
- The Co-operative Bank
- RBS
- TSB
- Yorkshire Bank
What You Need to Know If You Get a Letter
Individuals under DWP investigation won’t be told their bank accounts are being checked until around three months later. The new law also grants the DWP authority to recover money directly from fraudsters’ bank accounts. Courts can suspend driving licences of welfare debtors owing more than £1,000 who ignore repayments.
Accountants Clarkwell and Co advise: “If the DWP sends you a letter about an investigation, stay calm. Many checks are automatic and don’t always mean wrongdoing.” They recommend:
- Read the letter carefully
- Respond before the deadline
- Gather all relevant financial documents
- Seek professional advice if unsure
“Accountants familiar with benefit law and data tracking can be a huge help,” the firm adds.
Government Explains Strict Confidentiality Measures
Baroness Sherlock, Minister of State for the DWP, emphasised during a Lords debate that banks must keep investigations secret for at least three months. This prevents claimants from withdrawing funds before repayments can be enforced. She said:
“Financial institutions are prohibited from telling account holders that the DWP or PSFA has requested their information. This stops attempts to avoid repayment by moving money out prematurely.”
The ban on disclosure lasts three months or less, ensuring the process is fair yet effective.
With billions lost yearly to benefit fraud, authorities vow to clamp down hard. If you’re on benefits and get a letter from the DWP, don’t panic — but do take it seriously.
