Thousands of DWP benefit claimants found breaking rules in bank account monitoring trial

Thousands of people were found to be breaching DWP benefit rules in a trial monitoring bank accounts.

The Government is looking to pass legislation that will require third parties, such as banks and building societies, to share information with the Department for Work and Pensions. In an effort to "tackle fraud and error against the benefit system", the DWP requested two anonymous banks to use their internal data to identify accounts receiving certain types of benefit payments and matching the risk criteria provided by the DWP for capital and abroad entitlement rules.

This involved identifying accounts receiving a means-tested benefit with savings exceeding the capital limits and/or being accessed abroad for more than the permitted number of weeks. According to a report published in September 2023, one of the banks discovered over 60,000 benefit claimants were violating the rules.

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For the months of July, August and September 2022, it found 713,000 accounts were receiving Universal Credit, Pension Credit and Employment & Support Allowance (ESA). Among these, approximately 60,000 accounts were at risk of breaching the capital rule (eight per cent), reports Birminghamlive.

The average monthly balance for these accounts was £50,000, and around half of them were joint accounts. The unnamed bank also identified 3,000 accounts at risk of breaching the abroad rule.

In 2017, a pilot requested by the DWP reviewed a select number of cases involving personal information. As a result, 549 bank accounts were reported by the bank to the DWP as Suspicious Activity Reports (SARs) under the Proceeds of Crime Act 2002. From these reports, 32 per cent and 11 per cent were related to the capital eligibility rule and abroad eligibility rule respectively.

However, due to the specific selection of cases, it's believed these rates might be higher in random selections. The DWP report confirmed: "The above results of the small-scale tests with two banks and building societies indicate a strong potential for the use of banking data to identify possible capital and abroad fraud and error across a range of means-tested benefits."

At present, the DWP can only ask for details about a person's bank transactions if there is reasonable suspicion of fraud. But through the pending Data Protection and Information Bill, which is in the report stage in the House of Lords, the department could gain new powers to oversee benefit claimants' financial activity.

Through this potential legislation, the DWP could demand data from third parties like banks and financial organisations. According to the UK Government, this could aid in reducing benefit fraud and potentially save taxpayers up to £600m over the next five years.

However, civil liberties campaign group Big Brother Watch (BBW) has warned that the potential for "expansive surveillance, high rates of error, and disproportionate impact on people in vulnerable positions is huge". Disability Rights UK warned there are concerns the new powers would also see disabled people with care and support needs wrongly trigger fraud indicators, potentially leading to their benefits being suspended and being forced into intrusive interviews by DWP fraud investigators.

The organisation pointed out many disabled people set up bank accounts to pay for their social care, and these accounts hold capital which could be misidentified as fraudulent. A DWP spokesperson said: "This is an information-gathering power. It is not a surveillance power or an investigatory power.

"It requires third parties to look within their own data and provide minimal, relevant information to DWP only where this may signal that a claimant does not meet the eligibility criteria for the benefit they are receiving. DWP will not receive any data on the vast majority of claimants who comply with rules around benefit entitlements.

"We have a duty to treat taxpayers' money responsibly which is why we are cracking down on fraud and error. This is backed up by our £900 million Fraud Plan, which will bolster our counter-fraud operations and root out those who steal from the most vulnerable."