Public Authorities (Fraud, Error and Recovery) Act 2025

Section 78

Schedule 3 E+W+S Eligibility verification etc

Part 1 E+W+S Eligibility verification

1 E+W+S The Schedule to be inserted into the Social Security Administration Act 1992 after Schedule 3A is—

Section 121DB

“Schedule 3B E+W+S Eligibility verification

Part 1 E+W+S Power to require information

Power to require information by way of an eligibility verification notice

1 (1) The Secretary of State may, for the purposes of assisting in identifying incorrect payments of a relevant benefit, give a person of a type mentioned in paragraph 2 a notice (an “eligibility verification notice”) requiring the person to take the steps mentioned in sub-paragraphs (3) and (4).

(2) The Secretary of State may give an eligibility verification notice only where the Secretary of State considers that it is necessary and proportionate to do so.

(3) The first step is to identify relevant accounts (see paragraph 20(1)) which—

(a) the person provides, and

(b) are accounts—

(i) into which a specified relevant benefit has been paid, or are accounts linked to such accounts, and

(ii) which meet specified criteria (“eligibility indicators”) whether alone or with other accounts within paragraph (a) and sub-paragraph (i) of this paragraph.

(4) The second step is to give to the Secretary of State the following information for each identified account—

(a) specified details about the account (for example, sort code and account number),

(b) specified details about the account holders (for example, their names and dates of birth), and

(c) specified details about how the account meets the eligibility indicators.

(5) Information that amounts to transaction information or special category data—

(a) may not be required by the Secretary of State by way of an eligibility verification notice, and

(b) must not be given to the Secretary of State in response to such a notice.

(6) But the prohibition against the requiring and giving of special category data does not prohibit the requiring and giving of data to establish that an individual is in receipt of the specified relevant benefit.

(7) A person given an eligibility verification notice is not required to carry out the steps set out in sub-paragraphs (3) and (4) in relation to any account that is held outside the United Kingdom.

(8) In this paragraph the reference to an account which is linked to an account into which a specified relevant benefit is paid is to an account held by the same person who holds the account into which that benefit is paid.

(9) In this Schedule, references to an incorrect payment of a benefit—

(a) are references to a payment of an amount in respect of that benefit which is not equal to the amount for which the benefit recipient is eligible, and

(b) include references to payments that have been made or that may be made.

Types of person to whom an eligibility verification notice can be given

2 (1) The types of persons referred to in paragraph 1(1) are persons—

(a) to whom sub-paragraph (2) applies, or

(b) who are described in regulations.

(2) This sub-paragraph applies to persons who—

(a) are authorised—

(i) to accept deposits, or

(ii) to issue electronic money, and

(b) in the course of that activity, provide relevant accounts into which a relevant benefit may be paid.

(3) Regulations under sub-paragraph (1)(b) may describe only types of person who provide accounts which are, or correspond to, relevant accounts (including accounts that operate by reference to cryptoassets or any similar asset).

(4) In sub-paragraph (3), “cryptoasset” has the meaning given in section 84A of the Proceeds of Crime Act 2002.

(5) For the purposes of sub-paragraph (2)(a)(i) —

(a) the reference to accepting deposits is to carrying on the regulated activity of accepting deposits for the purposes of the Financial Services and Markets Act 2000 (see section 22 of that Act and article 5 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544)), and

(b) a person is authorised to accept deposits if they are an authorised person or an exempt person in relation to the carrying on of that activity for the purposes of the Financial Services and Markets Act 2000.

(6) For the purposes of sub-paragraph (2)(a)(ii), a person is authorised to issue electronic money if the person—

(a) is an electronic money institution, and

(b) the person is authorised or registered under Part 2 of the Electronic Money Regulations 2011 (S.I. 2011/99) in relation to carrying on the activity of issuing electronic money.

(7) In this paragraph, “electronic money” and “electronic money institution” have the meanings given by regulation 2(1) of those Regulations (and references to the issue of electronic money are to be construed in accordance with those Regulations).

Eligibility indicators

3 (1) The eligibility indicators in an eligibility verification notice must be criteria which indicate that the specified relevant benefit may have been, or may be, incorrectly paid.

(2) The eligibility indicators may be criteria to be met by a single account or by two or more accounts combined.

(3) The eligibility indicators must not include personal data.

Further provision about eligibility verification notices

4 (1) An eligibility verification notice must specify a period within which the person given the notice must comply with the notice to avoid liability to a penalty under Part 2 of this Schedule.

(2) The period specified—

(a) must begin with the day on which the notice is given, and

(b) must not be less than 14 days.

(3) An eligibility verification notice must give details about—

(a) the right to seek a review of the notice under paragraph 13,

(b) the right to appeal against the notice under paragraph 14, and

(c) the penalties that may be imposed under Part 2 of this Schedule.

(4) An eligibility verification notice (a “periodic eligibility verification notice”) may require a person to take the steps set out in paragraph 1(3) and (4) at specified intervals within a period not exceeding 1 year from the date of the notice.

(5) If it does so, the eligibility verification notice must set out the periods within which the person must comply with the eligibility verification notice for each specified interval.

(6) Each such period must not be less than 14 days.

(7) An eligibility verification notice may not require a person to examine historic data, except for the purpose set out in sub-paragraph (9).

(8) Data is historic, in relation to an eligibility verification notice, if it relates to a time before the beginning of the period of 1 year ending with the day on which the notice is given.

(9) An eligibility verification notice may require a person to provide the date that an account which meets an eligibility indicator first began to meet that indicator.

(10) An eligibility verification notice may require information—

(a) to be compiled or collated in a specified manner;

(b) to be provided in a specified way (including by electronic transmission to a specified address or portal).

(11) The Secretary of State may vary or revoke an eligibility verification notice by giving notice to the person to whom it was given.

Use of information obtained

5 (1) Information given to the Secretary of State in response to an eligibility verification notice (“EVM information”) may be used—

(a) to assist in identifying incorrect payments of any benefit, or

(b) in criminal or civil proceedings relating to such payments,

but not for any other purpose.

(2) Sub-paragraph (3) applies where—

(a) an authorised officer is considering whether to give an information notice under section 109BZA in relation to a person, and

(b) the Secretary of State has been given EVM information that is relevant to the question whether to give the information notice.

(3) The authorised officer must have regard to all information that the Secretary of State has that is relevant to the question whether to give the information notice, including information that is not EVM information.

(4) Sub-paragraph (5) applies where—

(a) the Secretary of State is considering whether to suspend payments of a benefit to a person in accordance with regulations under section 21 or 22 of the Social Security Act 1998, and

(b) the Secretary of State has been given EVM information that is relevant to the question whether to suspend the payments.

(5) The Secretary of State must have regard to all information that the Secretary of State has that is relevant to the question whether to suspend the payments, including information that is not EVM information.

(6) Sub-paragraph (7) applies where—

(a) the Secretary of State is considering whether a decision taken under section 8, 9 or 10 of the Social Security Act 1998 in relation to a person (“the earlier decision”) should be revised or superseded, and

(b) the Secretary of State has been given EVM information that is relevant to the question whether the earlier decision should be revised or superseded.

(7) The Secretary of State must have regard to all information that the Secretary of State has that is relevant to the question whether the earlier decision should be revised or superseded, including information that is not EVM information.

Restrictions on disclosure

6 (1) This Schedule does not require or authorise any disclosure of information that is prohibited by any of Parts 1 to 7 or Chapter 1 of Part 9 of the Investigatory Powers Act 2016.

(2) Any disclosure of information carried out in accordance with this Schedule (as read subject to sub-paragraph (1)) does not breach—

(a) any obligation of confidence owed by the person disclosing the information, or

(b) any other restriction on the disclosure of information (however imposed).

Part 2 E+W+S Penalties

Fixed penalty for failure to comply with an eligibility verification notice

7 (1) If the Secretary of State considers that a person given an eligibility verification notice—

(a) has failed to comply with the notice within the period specified, and

(b) has no reasonable excuse for the failure,

the Secretary of State may impose a penalty (a “fixed penalty”) on the person.

(2) But the Secretary of State may not impose a fixed penalty before—

(a) giving the person an opportunity to make representations about their compliance, and

(b) if the person has sought a review of the notice under paragraph 13, the conclusion of that review.

(3) The Secretary of State imposes a fixed penalty by giving the person a notice of the penalty (a “fixed penalty notice”).

(4) A fixed penalty notice must state—

(a) the reason for the penalty,

(b) the amount of the penalty, and

(c) the period within which it must be paid.

(5) A fixed penalty may not exceed £1,000.

(6) The Secretary of State may vary or revoke a fixed penalty notice by giving notice to the person to whom it was given.

(7) The Secretary of State may not impose more than one fixed penalty in respect of an eligibility verification notice except a periodic eligibility verification notice.

(8) In the case of a periodic eligibility verification notice, the Secretary of State may not impose more than one fixed penalty in respect of each specified interval.

Daily rate penalty for continuing failure to comply

8 (1) The Secretary of State may impose a penalty (a “daily rate penalty”) on a person if—

(a) a fixed penalty has been imposed on the person in relation to a failure to comply with an eligibility verification notice, and

(b) the Secretary of State considers that the person’s failure to comply without reasonable excuse is continuing.

(2) The Secretary of State imposes a daily rate penalty by giving the person a notice of the penalty (a “daily rate penalty notice”).

(3) A daily rate penalty notice must state—

(a) the reason for the penalty,

(b) the daily rate of the penalty, and

(c) that the penalty will be payable in relation to each day by the end of which the person has failed to comply with the eligibility verification notice or such earlier date as may be specified or described in the notice.

(4) The daily rate of a daily rate penalty may not exceed £40.

(5) The Secretary of State may vary or revoke a daily rate penalty notice by giving notice to the person to whom it was given.

(6) The Secretary of State may not impose more than one daily rate penalty in respect of an eligibility verification notice except a periodic eligibility verification notice.

(7) In the case of a periodic eligibility verification notice, the Secretary of State may not impose more than one daily rate penalty in respect of each specified interval.

Increased daily rate penalties

9 (1) This paragraph applies if—

(a) a daily rate penalty is imposed on a person,

(b) the failure to which the penalty relates continues for more than 30 days beginning with the first day on which the daily rate penalty is payable, and

(c) the person has been notified that the Secretary of State may apply for an increased daily rate penalty to be payable.

(2) The Secretary of State may make an application to the Tribunal for an increased daily rate penalty to be payable by the person.

(3) If the Tribunal determines that an increased daily rate penalty must be paid, it must determine—

(a) the increased daily rate, and

(b) the date from which the increased rate begins to be payable.

(4) In deciding the increased daily rate, the Tribunal, must, in particular, have regard to—

(a) the likely cost to the person of complying with the eligibility verification notice,

(b) any benefits to the person in not complying with it, and

(c) any benefits to anyone else resulting from the person’s non-compliance.

(5) The Tribunal may not determine a daily rate that exceeds £1,000.

(6) The Secretary of State must notify the person of the Tribunal’s determination.

Penalties for inaccurate or prohibited information

10 (1) The Secretary of State may impose a penalty (an “inaccurate information penalty”) on a person under this paragraph if the Secretary of State considers that—

(a) in complying with an eligibility verification notice, the person has given the Secretary of State inaccurate information, and

(b) condition A, B or C is met.

(2) Condition A is that the inaccuracy was—

(a) deliberate, or

(b) due to a failure, without reasonable excuse, by the person to take reasonable care.

(3) Condition B is that the person—

(a) knew of the inaccuracy at the time of giving the information,

(b) failed to inform the Secretary of State at that time, and

(c) has no reasonable excuse for the failure.

(4) Condition C is that the person—

(a) discovered the inaccuracy some time later,

(b) failed to take reasonable steps to inform the Secretary of State, and

(c) has no reasonable excuse for the failure.

(5) The Secretary of State may impose a penalty (a “prohibited information penalty”) under this paragraph if the person, without reasonable excuse, gives the Secretary of State information in contravention of paragraph 1(5) (transaction information or special category data).

(6) But the Secretary of State may not impose a penalty under this paragraph before giving the person an opportunity to make representations about—

(a) in the case of an inaccurate information penalty, whether or not—

(i) the information is inaccurate;

(ii) condition A, B or C is met;

(b) in the case of a prohibited information penalty, whether or not the person has given information in contravention of paragraph 1(5) without any reasonable excuse.

(7) The Secretary of State imposes a penalty under this paragraph by giving a notice (an “information penalty notice”).

(8) An information penalty notice must state—

(a) the reason for the penalty,

(b) the amount of the penalty, and

(c) the period within which it must be paid.

(9) A penalty under this paragraph may not exceed £3,000.

(10) The Secretary of State may vary or revoke an information penalty notice by giving notice to the person to whom it was given.

Recovery of penalties

11 (1) In England and Wales, a penalty imposed under this Part of this Schedule is recoverable—

(a) if the county court so orders, as if it were payable under an order of that court;

(b) if the High Court so orders, as if it were payable under an order of that court.

(2) In Scotland, a penalty imposed under this Part of this Schedule may be enforced in the same manner as an extract registered decree arbitral bearing a warrant for execution issued by the sheriff court of any sheriffdom in Scotland.

Power to change maximum amount of penalties

12 Regulations may amend the amount for the time being specified in paragraph 7(5), 8(4), 9(5) or 10(9) to reflect a change in the value of money.

Part 3 E+W+S Reviews

13 (1) A person to whom an eligibility verification notice is given may apply to the Secretary of State for a review of the decision to give the notice.

(2) An application under sub-paragraph (1) must be made within the period of 14 days beginning with the day on which the notice is given.

(3) On a review, the Secretary of State may—

(a) revoke the notice,

(b) uphold the notice, or

(c) vary the notice.

(4) After a review has been carried out, the Secretary of State must—

(a) notify the person who applied for the review of the outcome of the review, and

(b) if the outcome was to vary the notice, give the person the varied notice.

(5) Where an application for a review of an eligibility verification notice is made under sub-paragraph (1) —

(a) the notice is of no effect until the application is determined or withdrawn, and

(b) if the notice is upheld or varied, the period for compliance (or the first period for compliance in the case of a periodic eligibility verification notice) begins with the day on which the outcome of the review is notified to the person to whom the eligibility verification notice was given.

Part 4 E+W+S Appeals

Appeals against eligibility verification notices

14 (1) A person who is given an eligibility verification notice may appeal to the Tribunal against the notice on any of the following grounds—

(a) the person is not a person to whom an eligibility verification notice may be given;

(b) the notice is not in accordance with this Schedule;

(c) it is unduly onerous to comply with the notice.

(2) An appeal under sub-paragraph (1) may not be brought after the end of—

(a) the period of 14 days beginning with—

(i) the day on which the eligibility verification notice was given, or

(ii) if the person seeks a review of the notice under paragraph 13, the day on which the person is notified of the outcome of the review, or

(b) such longer period (if any) as the Tribunal considers reasonable in all the circumstances.

(3) On an appeal under sub-paragraph (1), the Tribunal may—

(a) amend the eligibility verification notice,

(b) revoke the eligibility verification notice, or

(c) dismiss the appeal.

(4) Where an appeal under sub-paragraph (1) is brought against an eligibility verification notice the notice is of no effect until the appeal is determined or withdrawn, unless the Tribunal orders otherwise.

Appeals against penalty notices

15 (1) A person on whom a penalty is imposed under Part 2 of this Schedule may appeal to the Tribunal against—

(a) the penalty;

(b) the amount of the penalty;

(c) in the case of a daily rate penalty, the period during which the daily amounts are payable.

(2) But a person may not appeal against a decision of the Tribunal to increase a daily rate penalty under paragraph 9.

(3) An appeal under sub-paragraph (1) may not be brought after the end of—

(a) the period of 30 days beginning with the date on which the penalty notice in relation to the penalty being appealed was given, or

(b) such longer period (if any) as the Tribunal considers reasonable in all the circumstances.

(4) On an appeal under sub-paragraph (1), the Tribunal may—

(a) revoke the decision to impose the penalty;

(b) amend the amount of the penalty;

(c) amend the period within which all or part of the penalty is to be paid;

(d) dismiss the appeal.

(5) If an appeal is brought under sub-paragraph (1), the penalty which is the subject of the appeal is not payable until the appeal is determined or withdrawn.

Appeals: further provision

16 (1) If the Tribunal confirms or varies an eligibility verification notice or the imposition of a penalty on an appeal under this Part of this Schedule, the person to whom the notice was given, or on whom the penalty was imposed, must comply with the notice or pay the penalty—

(a) within such period as may be specified by the Tribunal, or

(b) if the Tribunal does not specify a period, within such period as may be specified by the Secretary of State and notified to the person.

(2) A decision by the Tribunal on an appeal under this Part of this Schedule is final (despite the provisions of sections 11 and 13 of the Tribunals, Courts and Enforcement Act 2007).

Part 5 E+W+S Code of practice

Requirement to issue a code of practice

17 (1) The Secretary of State must issue a code of practice about eligibility verification notices before giving the first such notice under this Schedule.

(2) The code of practice must include provision about—

(a) the exercise of the power to issue an eligibility verification notice;

(b) the processing, use and retention of information given in response to an eligibility verification notice;

(c) the circumstances in which the Secretary of State will regard a person as having complied with an eligibility verification notice;

(d) the imposition of penalties in relation to an eligibility verification notice;

(e) reviews under paragraph 13.

(3) Before issuing the code of practice, the Secretary of State must carry out a public consultation on a draft of the code.

(4) The Secretary of State must lay the code of practice before Parliament.

(5) The requirement in sub-paragraph (3) may be satisfied by public consultation carried out before this paragraph comes into force.

Code of practice: revisions

18 (1) The Secretary of State may from time to time revise and re-issue the code of practice issued under paragraph 17.

(2) Paragraph 17(3)and (4) apply in relation to a re-issue of a code of practice as they apply in relation to the issue of the first code of practice.

(3) But paragraph 17(3) does not apply if the only changes to be made to the code of practice are—

(a) updates to references to legislation or documents which have become out of date, or

(b) in the opinion of the Secretary of State, other minor corrections.

Part 6 E+W+S General provision and interpretation

Relevant benefits

19 (1) In this Schedule “relevant benefit” means any of the following benefits—

(a) universal credit;

(b) employment and support allowance;

(c) state pension credit.

(2) Regulations may amend this paragraph so as to add, or remove, types of benefit to, or from, the definition of “relevant benefit”.

(3) Regulations under sub-paragraph (2) may add a type of benefit only to the extent that the benefit is administered by, or on behalf of, the Secretary of State.

Accounts

20 (1) In this Schedule “relevant account” means a personal account which operates as—

(a) a current account,

(b) a savings account, or

(c) an investment account,

including such an account which operates by reference to electronic money.

(2) For the purposes of sub-paragraph (1)—

(a) “personal account” means an account held by one or more individuals other than an account that is provided for purposes relating to a trade, business or profession;

(b) a current account includes any account—

(i) in which individuals can hold, and from which individuals can withdraw, money, and

(ii) which is designed to allow the holder’s money to be used for executing transactions with third parties,

but does not include credit card accounts or current account mortgages;

(c) “electronic money” has the meaning it has in the Electronic Money Regulations 2011 (S.I. 2011/99) (see regulation 2(1)).

(3) In this Schedule a reference to a person holding an account includes a reference to—

(a) a person holding an account jointly with one or more other persons, and

(b) an account being, in any way, in the person’s name,

and “holder” is to be read accordingly.

(4) Sub-paragraphs (5) to (8) apply for the purposes of this Schedule where an eligibility verification notice is given to a body corporate (“P”).

(5) The reference in paragraph 1(3)(a) to P providing an account includes a reference to another person in the same group as P providing an account if the condition in sub-paragraph (6) is met.

(6) The condition is that P—

(a) is able to identify accounts provided by the other person that are within paragraph 1(3)(b), and

(b) is able to obtain the information about those accounts mentioned in paragraph 1(4).

(7) For the purposes of sub-paragraph (5), two persons are in the same group if both are bodies corporate and—

(a) one of them is a subsidiary of the other, or

(b) both of them are subsidiaries of the same body corporate.

(8) In sub-paragraph (7), “subsidiary” has the meaning given by section 1159 of the Companies Act 2006.

Service

21 In this Schedule, references to giving a notice or other document (however expressed) include sending the notice or document by post.

General interpretation

22 In this Schedule—

• “benefit” means—

  (a)

  any relevant social security benefit as defined in section 121DA(7), other than a state pension, and

  (b)

  any payment mentioned in subsection (2)(d) of section 2 of the Employment and Training Act 1973, under arrangements made under that section;

• “daily rate penalty” means a penalty imposed under paragraph 8(1);

• “eligibility indicators” has the meaning given in paragraph 1(3)(b)(ii) (and see paragraph 3 for conditions that eligibility indicators must meet);

• “eligibility verification notice” has the meaning given in paragraph 1(1);

• “fixed penalty” means a penalty imposed under paragraph 7(1);

• “incorrect payment” , in relation to a benefit, has the meaning given in paragraph 1(9);

• “notice” means notice in writing (and “notify” is to be read accordingly);

• “periodic eligibility verification notice” has the meaning given in paragraph 4(4);

• “personal data” has the same meaning as in the Data Protection Act 2018 (see section 3(2) of that Act);

• “processing”, in relation to information, has the same meaning as in the Data Protection Act 2018 (see section 3(4) of that Act);

• “special category data” means the types of personal data the processing of which is prohibited (to any extent) from time to time under Article 9 of Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation);

• “specified” means specified or described in an eligibility verification notice, unless the context requires otherwise;

• “state pension” means—

  (a)

  a state pension under Part 1 of the Pensions Act 2014;

  (b)

  a retirement pension, including a Graduated Retirement Benefit, under Part 2 or 3 of the Social Security Contributions and Benefits Act 1992;

  (c)

  a shared additional pension under Part 2 of that Act;

• “transaction information”, in relation to an account, means information which—

  (a)

  may enable the identification of the subject matter or the amount of a transaction completed through the account, or

  (b)

  may enable the identification of a party to such a transaction who is not a holder of the account,

  but does not include information which relates to the payment of a relevant benefit into the account;

• “the Tribunal” means the First-tier Tribunal.

Relationship with other powers

23 Nothing in this Schedule limits the powers conferred on the Secretary of State by sections 109B and 109BZA (powers to require information) (but this is subject to paragraph 5).”

Commencement Information

I1 Sch. 3 para. 1 in force at Royal Assent for specified purposes, see s. 109(2)(b)

I2 Sch. 3 para. 1 in force at 2.2.2026 in so far as not already in force by S.I. 2025/1265, reg. 2(2)(c)

Part 2 E+W+S Proceeds of Crime Act 2002

2 (1) The Proceeds of Crime Act 2002 is amended as follows. E+W+S

(2) In section 330 (failure to disclose: regulated sector), after subsection (7D) insert—

“(7E) Nor does a person commit an offence under this section if—

(a) the information or other matter mentioned in subsection (3) consists of or includes information that was obtained only in consequence of complying with an eligibility verification notice given to the person under paragraph 1(1) of Schedule 3B to the Social Security Administration Act 1992, and

(b) but for the information so obtained the person would not know or suspect, or have reasonable grounds for knowing or suspecting, that another person is engaged in money laundering.”

(3) In section 331 (failure to disclose: nominated officers in the regulated sector), after subsection (6B) insert—

“(6C) Nor does a person commit an offence under this section if—

(a) the information or other matter mentioned in subsection (3) consists of or includes information that was obtained only in consequence of complying with an eligibility verification notice given to the person under paragraph 1(1) of Schedule 3B to the Social Security Administration Act 1992, and

(b) but for the information so obtained the person would not know or suspect, or have reasonable grounds for knowing or suspecting, that another person is engaged in money laundering.”

Commencement Information

I3 Sch. 3 para. 2 not in force at Royal Assent, see s. 109(1)

I4 Sch. 3 para. 2 in force at 2.2.2026 by S.I. 2025/1265, reg. 2(2)(c)