The DWP has issued a fresh statement about new powers coming in to allow officials to look at details of people’s bank accounts in efforts to tackle benefits fraud.
Labour is to bring in a bill granting investigators powers to order banks to hand over information where a person is suspected of wrongfully claiming benefits.
The Fraud, Error and Debt Bill will also enable officials to seize assets and raid properties to take down criminal gangs who are taking advantage of the system, with some critics fearing the new powers are “invasive”.
One expert said the powers will most likely be used to target people on means-tested benefits such as Universal Credit, Jobseeker’s Allowance, Employment and Support Allowance and Housing Benefit.
Asked for more detail about the changes, a DWP spokesperson said: “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.”
Yiannis Zourmpanos, a financial advisor and senior contributor at Bountii, warned previously there are “serious questions” about the new law and how it could affect people’s privacy.
He said: “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 said the Bill will include “strong safeguards” to make sure the powers are used proportionately, with new oversight and reporting mechanisms to ensure they are used only when necessary.
The department said the new measures will also help claimants in preventing mistakes that could lead to 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.
But Mr Zourmpanos has cautioned that the new powers could lead to innocent claimants feeling worried 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 people to make sure their finances are accurate and in order. The finance expert said: “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.”
