An expert has warned new DWP powers to look at claimants’ bank accounts could see thousands wrongly targeted. The fresh measures will allow officials to demand financial information in cases where they suspect fraud, where an individual is believed to be wrongly receiving payments or being overpaid.
Benson Varghese, a criminal defence attorney and founder of Varghese Summersett, said: “These powers carry a high danger of improper targeting.” He highlighted that a 2022 National Audit Office report discovered six percent of Universal Credit fraud probes were based on incorrect assumptions or errors, leading to undue stress for thousands of claimants.
The expert said: “If current trends persist, around 350,000 Universal Credit claimants could face unjust scrutiny. A surprise deposit in a bank account, like a family gift or a one-off refund, might be misinterpreted as fraudulent activity.”
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Another financial crime specialist recently indicated that these checks could trigger “unnecessary anxiety” among innocent claimants worried about being mistakenly singled out. These new powers are coming in as part of the Fraud, Error and Debt Bill.
Mr Varghese thinks that the new measures may begin to take effect from late 2025 or early 2026, as the HMRC Connect system took around a year and a half to be implemented after becoming law. To make sure the powers are only used where appropriate, he recommends that the Department for Work and Pensions (DWP) should first define their criteria for investigation.
He also suggested an independent review of potential cases before claimants are approached. He said: “Claimants should also be informed of their rights during inquiries by the DWP. In a similar Canadian approach, claimants were given written notice and the chance to clarify suspicious activities before further action. To ensure procedural fairness, the DWP must follow suit.”
The DWP will carry out bank account checks to clamp down on benefit fraud
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Mr Varghese also suggested some other ways to prevent benefit fraud, such as more thorough meticulous initial checks. He explained: “Cross-referencing claimant data with HMRC or DVLA systems could prevent discrepancies without post-approval inquiries.
“Unintentional inaccuracies may also be reduced by public education efforts about reporting changes. The ONS reports that 25 percent of benefit overpayments are due to claimant errors, not fraud.”
Meanwhile, Sebrina McCullough, director of external relations at Money Wellness, voiced significant concerns on the new initiatives and the lack of clarity around safeguards to avoid misuse of the powers. She remarked: “Without full details of the bill, it is unclear what controls and oversight will be in place to prevent misuse or misapplication of these powers.
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“Our concern is that these measures may inadvertently harm vulnerable individuals more than they deter large-scale fraud. Safeguards must include clear oversight to ensure transparency in how data is used.
“As well as proportionality in targeting suspected fraud and a robust appeal process to protect individuals from being wrongly accused.” She is pushing for the DWP to improve its communication efforts to make sure claimants know their rights and duties.
During the Budget statement, Rachel Reeves announced that the Government is aiming to claw back £4.5 billion through its crackdown on benefits fraud. She said that criminal gangs were often to blame for fraudulent claims.