The UK Department for Work and Pensions (DWP) plans to monitor bank accounts of benefit recipients to identify potential fraud. Initially, the DWP will scrutinize accounts with regular overseas transactions or balances exceeding £16,000. The plan aims to eventually implement a fully automated system to detect anomalies and allow the DWP to reclaim overpaid funds directly from bank accounts without a court order. While the government argues this will streamline the process, UK Finance raises concerns about potential risks to vulnerable customers and conflicts with existing regulations.
The Department for Work and Pensions has detailed specific bank account actions involving individuals receiving benefits that will come under surveillance in a proposed clampdown on benefit fraud . As an initial step, the DWP aims to screen for accounts with regular overseas transactions or balances exceeding £16,000, which is the established savings limit for eligibility for Universal Credit.
Mr Cichocki has recognised the critical need to combat fraud while also calling on the government to establish measures that "prevent fraud and error entering the benefits system in the first place". Concerns have been put forth by UK Finance about possible clashes between the government's intentions and the Financial Conduct Authority's consumer duty, as conveyed by reports from the Express.
Presently, the department can only demand such financial information if there's a suspicion of fraud, and solely on an individual basis. It argues that extended access to bank records will help reveal potential fraudulent activities that might stay undetected, aiming to preserve around £500m each year for taxpayers when the system is entirely up and running.
Currently, the DWP has methods to reclaim benefits overpayments from those within the welfare system or employed individuals through deductions via PAYE. The department asserts that direct access to debtors' bank accounts would streamline the recovery process, especially from individuals who have stopped receiving benefits or are self-employed—potentially easing the legal system’s load.
Benefit Fraud BANK ACCOUNT MONITORING UK GOVERNMENT DEPARTMENT FOR WORK AND PENSIONS FINANCIAL REGULATION
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