The Department for Work and Pensions (DWP) has confirmed that new measures are being introduced to combat benefits fraud by scrutinising details of claimants' bank accounts. Labour plans to put into law a bill which will empower investigators to demand banks to disclose details when someone is suspected of benefits fraud.
The upcoming Fraud, Error and Debt Bill will also authorise officials to seize assets and conduct raids on properties to tackle criminal organisations who are exploiting the benefits system. Despite its objective to root out fraud, some are concerned about the potential "invasive" nature of these powers.
Experts believe that these enhanced powers will most likely be focused on claimants receiving means-tested benefits, including Universal Credit, Jobseeker's Allowance, Employment and Support Allowance and Housing Benefit. When asked to elaborate on the impending changes, a representative from the DWP commented: "We are cracking down on benefit fraud to save the taxpayer £1.6billion over the next five years while protecting vulnerable customers from racking up debt through overpayments.
"Staff will be trained to the highest standards on the use of any new powers, which will be used appropriately and proportionately and monitored through robust, new oversight and reporting rules. DWP will not have access to people’s bank accounts and will not share their personal information with third parties."
Financial expert Yiannis Zourmpanos, senior contributor at Bountii, has voiced concerns about the new legislation, highlighting "serious questions" around the law's impact on privacy rights. He expressed: "The idea that the Government can peer into your bank account feels invasive, and I understand why. From a financial perspective, this kind of oversight raises ethical issues.
"But remember, it's also a balancing act. The DWP is trying to ensure that public funds are being properly allocated, and they're arguing that the level of fraud demands a tougher stance."
The DWP stated that the bill will incorporate "strong safeguards" to ensure the powers are used proportionately, with new oversight and reporting mechanisms to guarantee they are used only when necessary. The department also set out that the new measures will assist claimants in preventing mistakes that could result in them going into debt or receiving overpayments.
State pensioners will not be targeted under the new laws as overpayments for the state pension are at almost zero percent. However, Mr Zourmpanos has warned that the new powers could lead to innocent claimants feeling anxious they will be "caught up in this dragnet without cause".
He explained: "What's worrying is that legitimate claimants-people who rely on these benefits to get by-could get swept up in this if their situation looks questionable on paper. I've seen how quickly things can spiral in the world of finance when things don't add up, even if there's a reasonable explanation."
He urged individuals to ensure their financial records are accurate and up-to-date. The finance expert stated: "If there's a legitimate reason for discrepancies, like receiving a one-off gift or financial assistance from a family member, document it. Banks are increasingly tied into this process, and any red flags in your account could lead to further scrutiny."
