Ministers plan fresh data access from banks to tackle benefit fraud from 2026, raising hopes of savings and fears of mistakes.
The Department for Work and Pensions has set out how new anti-fraud powers would work from 2026, including targeted checks with banks. One major benefit sits outside the regime, while three others move into focus first, with scope to widen the net later if Parliament agrees.
What the new powers mean
The government intends to use the forthcoming public authorities (fraud, error and recovery) bill to tighten eligibility checks. The plan relies on formal notices sent to third parties, including banks, to obtain information that can help confirm or challenge a claimant’s entitlement. Officials say decisions affecting payments will not be automated.
DWP says a person will review any case where new information could change a benefit award or stop a claim.
The policy aims to cut losses from fraud and error and to recover money where overpayments arise. Ministers forecast savings to the public purse measured in the millions of pounds. The department frames the approach as targeted, not a blanket trawl through everyone’s financial affairs.
Which benefits are first in line
Early use will prioritise benefits where incorrect payments currently run highest. The guidance highlights three names familiar to millions of households.
- Universal Credit
- Pension Credit
- Employment and Support Allowance
The initial focus is on UC, Pension Credit and ESA, with the option of adding other benefits later via affirmative regulations.
Parliament would need to approve any expansion. The department stresses this staged approach allows systems to bed in and for safeguards to be tested as the programme scales.
State pension stays out of scope
Claimants receiving State Pension will not face the new bank account checks. The department states the State Pension cannot be brought under these powers by future regulations.
The State Pension is explicitly excluded and cannot be added later under the bill’s regulation-making powers.
The exclusion reflects the contributory nature of the State Pension. It differs from Pension Credit, which is means-tested and will form part of the early rollout.
How cross-checks could spill over
Information obtained for one benefit can prompt DWP to review entitlement to linked support. That matters for mixed claims, where eligibility overlaps.
Officials give a typical interaction: a Pension Credit decision often affects Housing Benefit. If new data shows a claimant does not qualify for Pension Credit, the department will usually reassess any Housing Benefit that relied on the same income and capital picture.
What might be checked
The notices to banks are designed to verify eligibility indicators, not to give free-form access to accounts. The focus sits on facts that determine entitlement under law.
- Capital levels that can affect means-tested benefits.
- Regular income paid in that must be declared to DWP.
- Account details needed to confirm a person’s identity and claim status.
Claimants must still report changes of circumstances. The new powers add an additional source of information to test what has been declared.
At a glance
| Benefit | Status under 2026 bank checks | What this could mean for claimants |
|---|---|---|
| Universal Credit | In scope from the initial phase | Targeted data requests to verify income and capital that affect monthly awards |
| Pension Credit | In scope from the initial phase | Checks may trigger reviews of linked Housing Benefit where eligibility depends on the same data |
| Employment and Support Allowance | In scope from the initial phase | Data may be used to confirm income, savings and living arrangements relevant to entitlement |
| State Pension | Explicitly excluded from the new powers | No bank data requests under these powers for State Pension recipients |
Concerns over impact on vulnerable people
The Regulatory Policy Committee, the independent watchdog that scrutinises impact assessments, has challenged the department’s analysis. It argues the assessment underplays the effect on people with the least money when officials recover overpayments caused by error. It also notes that the assessment does not set out the scale of costs that banks might face when complying with data notices, even if recovery from debtors is planned.
The watchdog says the bill’s assessment has understated effects on the poorest and has not quantified bank compliance costs.
Campaigners worry that data-matching can throw up false leads, creating stress for people who have done nothing wrong. DWP insists staff will handle decisions and that claimants will have an opportunity to explain their circumstances before any change to awards.
What you should do now
Nothing changes today. The powers are scheduled to apply from 2026, subject to the bill’s progress and secondary legislation. The best protection remains accurate reporting and good records.
- Report changes quickly, including work, savings, and household circumstances.
- Keep bank statements and payslips for reference during any review.
- Check the difference between State Pension and Pension Credit, as only the latter is in scope.
- Respond promptly to any DWP letter requesting information, and keep copies of everything you send.
Example scenarios to make sense of the changes
Pension Credit review with a housing knock-on
Someone receives Pension Credit and therefore also gets Housing Benefit. A data notice leads to information suggesting their capital now exceeds the Pension Credit limit after an inheritance. DWP reviews the Pension Credit first. If entitlement ends, it then reassesses Housing Benefit because the gateway condition has changed.
Universal Credit claimant with irregular income
A claimant’s Universal Credit fluctuates due to variable hours at work. A data request indicates uneven monthly deposits. The claimant provides payslips and explains shift patterns. The caseworker updates the record, and the award continues with adjusted calculations. The data trigger ends without a penalty.
Key points to remember
State Pension stays out; three benefits go in first; Parliament can add others; a human signs off decisions.
The programme aims to reduce fraud and error without sweeping up the majority of honest claimants. That balance depends on precise targeting, clear communication, and swift correction where data does not tell the full story.
Extra context to help you plan
Pension Credit is means-tested support that tops up retirement income. It is separate from the State Pension and unlocks extra help, including some council tax and housing support. Because it depends on income and capital, it sits naturally within the early phase of bank checks. People who qualify often miss out, so checking entitlement can still be worthwhile even as scrutiny increases.
If you receive multiple benefits, expect cross-effects. A change in one entitlement can cascade to another. Keeping simple timelines of income, savings changes, and letters received makes any future review quicker and less stressful. If you think an overpayment arose from official error, you can ask for a reconsideration and explain your evidence.
So this isn’t a blanket trawl, but who audits the “targeted” bank notices? After past DWP errors, why should we beleive innocent claimants won’t get flagged by mistake, then struggle to get payments reinstated?