UK Banks to Monitor Pensioners’ Accounts Under New Fraud and Recovery Bill

The UK government plans to grant banks new powers to monitor pensioners’ accounts for fraud and errors under the Public Authorities (Fraud, Error and Recovery) Bill, aiming to recover £9.6 billion by 2030.

The legislation, expected to return to the House of Lords this month, will require banks to report any suspicious activity of benefit claimants, including those receiving pension credit, directly to the Department for Work and Pensions (DWP). Overpaid or fraudulently claimed funds could then be recovered automatically from bank accounts.

Last year alone, £9.5 billion was lost to benefit overpayments and fraud, including £610 million in pension credit, of which £270 million was due to fraudulent claims. The DWP plans to use an AI tool developed by the Cabinet Office to analyze account data, while all final decisions on entitlement will be made by humans.

Banks will be prohibited from notifying customers about any shared data, a move that has sparked concerns about potential harm to vulnerable individuals. UK Finance, which represents banks, warned that the new requirements are “operationally challenging” and could unintentionally affect claimants.

Campaign groups and opposition politicians have criticized the bill, highlighting its unprecedented powers to monitor accounts without any suspicion of fraud. Helen Whately, Shadow Work and Pensions Secretary, said the legislation is being rushed and lacks proper safeguards.

Supporters argue the bill is necessary to protect taxpayer money. A DWP spokesperson said, “All powers in the Fraud, Error and Recovery Bill are underpinned by fairness and proportionality, with safeguards and independent oversight in place. This bill is projected to save £1.5 billion over the next five years and £9.6 billion by 2030.”