Banks raise concerns over benefit debt recovery powers

Published On Jan 23, 2025, 7:39 AM

The UK government is introducing a new law that empowers the Department for Work and Pensions (DWP) to reclaim benefits overpayments directly from bank accounts without a court order. This move aims to speed up debt recovery and combat benefits fraud, but the UK banking industry has raised concerns that this could violate consumer protection laws, particularly regarding vulnerable account holders. The DWP will have to consider individual financial circumstances and could compel banks to implement direct deduction orders, while banks will be allowed to charge fees for administration. The banking sector has been lobbying against these plans due to potential conflicts with existing regulations and risks to consumers.