Consumer champion Martin Lewis has written to Work and Pensions Secretary Pat McFadden, warning that up to 8.3 million Universal Credit recipients are effectively blocked from switching bank accounts. Lewis describes the bureaucratic barriers as "bad for competition, bad for consumers and bad for the economy" and urges the Department for Work and Pensions to swiftly investigate and fix the issue.
The problem centres on a requirement for many UC claimants to attend in-person Jobcentre appointments simply to change their bank details. This process contradicts the Current Account Switch Service, a government-backed scheme designed for seamless, one-click bank transfers. Lewis argues the barriers prevent claimants from accessing better deals, incentives, and accounts that could improve their financial situation without any cost to the government.
Writing to McFadden on 12 December, Lewis stated: «Up to 8.3 million people on Universal Credit may effectively be excluded from switching bank accounts, so they can't take advantage of deals, incentives and accounts that could improve their financial situation (without any cost to the Government). This is bad for competition, bad for consumers and bad for the economy.»
Impact on claimants
The process adds significant hassle for UC recipients, particularly those in work. Lewis explained: «This adds hassle, cost and, for the millions on Universal Credit who are in work, possible loss of income (never mind additional impact on those with accessibility issues). It also looks to be an inefficient use of Jobcentre resources.»
On Good Morning Britain, Lewis revealed that claimants told him: «Even though switching banks goes through fraud checks and is a government-backed scheme, they have to go in and get an appointment with their Universal Credit person at the job centre. They're told that they have to come in, possibly take time off work to sit and sign the forms and it's not worth it.»
System outdated for digital banking
Lewis highlighted that the Universal Credit system has not been updated to accommodate modern digital banks. He noted: «The UC system does not seem to have been fully updated to incorporate digital banks, some of which lack physical cards or printed statements, making the whole system cumbersome.»
The consumer champion described the bureaucratic process as running «counter to the whole idea of simple one-click switching» and added: «The bureaucratic process of UC seems to, without cause, pervert the ease of the process, and add barriers that many people, especially those who work and are on UC, tell me simply make it not worth the time.»
Consumer frustration
After appealing to his social media followers, Lewis said he was «surprised and concerned to see how widespread the issue was». Consumers described the process as «stressful, inconvenient and unnecessary». Some gave up and stuck with their existing account, while others told Lewis «they will never attempt to switch banks again».
Lewis included a detailed briefing for McFadden, compiled by specialists at MoneySavingExpert.com, featuring case studies. He concluded his letter: «I suspect this is an issue that hasn't been raised with you before, and you will be as keen as I am to look to investigate how widespread the problem is (something only the Government can collect official data on) and then address the wider issue. I'd be happy to meet and discuss this if it would help.»
DWP response
A DWP spokesperson stated: «We thank MSE for their letter and will respond. DWP are committed to ensuring people receive the support they're entitled to, while creating a welfare system that is fair to the taxpayer. Personal information such as bank details must be treated securely to ensure payments reach the right person and they are protected from exploitation or impersonation.»
Note: This article was created with Artificial Intelligence (AI).
