Thu, 23 Jan 2025

Banks raise concerns over benefit debt recovery powers

The biggest group representing UK banks says the measures could conflict with customer protections.

* UK banking industry warns government plans to crackdown on benefit fraud could leave banks at risk of breaking consumer protection rules
* New law allows Department for Work and Pensions (DWP) to reclaim money from accounts without a court order
* UK Finance, biggest business group representing British banks, raises concerns that the plans could undermine banks' efforts to protect vulnerable account holders
* Plans aim to speed up debt recovery process and help crackdown on benefits fraud, but may create risks for vulnerable customers
* Government argues new powers will allow DWP to reclaim funds from those no longer on benefits or who are self-employed, and ease pressures on the court system
* Banks would be able to charge claimant a fee to cover administration costs, but must consider three months' worth of bank statements before making deductions
* UK Finance calls for controls to prevent fraud and error entering benefits system in the first place
* Plans could conflict with Financial Conduct Authority's consumer duty, which sets higher standards for consumer protection and gives banks specific obligation to protect vulnerable customers
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