New powers handed to the Department for Work and Pensions ( DWP ) to look into the bank accounts of claimants could see thousands wrongly targeted, an expert has claimed. The new measures will allow the DWP to get hold of financial information in cases where they suspect fraud.
Officials can also use their new powers when they believe a person is incorrectly 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.”
A 2022 National Audit Office report discovered six percent of Universal Credit fraud probes were based on incorrect assumptions or errors, affecting thousands of claimants. Mr Varghese said: “If current trends persist, around 350,000 Universal Credit claimants could face unjust scrutiny.
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“A surprise deposit in a bank account, like a family gift or a one-off refund, might be misinterpreted as fraudulent activity.” The new powers are coming in as part of the Fraud, Error and Debt Bill, Mirror reports.
Mr Varghese said the new measures may begin to take effect from late 2025 or early 2026. This is because the HMRC Connect system took about a year and a half to be implemented after becoming law, he said.
He recommends that the DWP should define their criteria for investigation to ensure its powers are only used where appropriate. Mr Varghese 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.”
Mr Varghese suggested more thorough meticulous initial checks could tackle fraud. He said: “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.”
Sebrina McCullough, director of external relations at Money Wellness, said she had significant concerns on the new initiatives. The lack of clarity around safeguards to avoid misuse of the powers is also concerning, she said.
She said: “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. 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.” Ms McCullough is pushing for the DWP to improve its communication to make sure claimants are aware of their rights and duties.
Rachel Reeves last year announced that the Government is aiming to retrieve £4.5 billion through its crackdown on benefits fraud.