Millions of people and small business owners will be better
protected against their bank account being closed, as the
government goes further and faster to drive growth and delivers
security for working people through the Plan for
Change.
Banks and other payment service providers will be required to
give customers at least 90 days' notice before closing their
account or terminating a payment service – an increase from the
two months currently required – under new rules expected to come
into force for relevant new contracts from April
2026.
Banks will also need to provide a clear explanation to customers
in writing, so people can challenge decisions, such as through
the Financial Ombudsman Service.
The new rules will give customers more time to challenge
decisions they disagree with and find a new bank if their account
is closed. This will support small businesses which have
complained about their account being closed without reason at
short notice – leaving them no time to complain or find a
replacement bank.
Economic Secretary to the Treasury, , said:
Delivering economic security for working people is at the heart
of our Plan for Change and strengthening protections against
debanking will protect people's and businesses' access to banking
services.
Under the new rules, customers will receive more notice of
account closures, be entitled to an explanation as to why their
account has been closed and have more opportunity to challenge
such decisions.
The nine largest personal current account providers in the UK are
already legally required to offer basic personal bank accounts to
people who legally reside in the UK who do not have or are not
eligible for an account. The new rules will help to ensure
continued access to basic banking services for the most
vulnerable.
The legislation will support existing protections, including
those which prohibit a bank from discriminating against a UK
consumer based on political opinions or beliefs when accessing a
payment account.
By ensuring a more predictable access to banking and other
payment services, the government is reinforcing its commitment to
the millions of individuals and businesses across the UK who rely
on these vital services.
More information
The new legislation being brought forward subject to
Parliamentary approval would apply to all payment service
providers who decide to terminate payment service contracts
without a definite expiry date, including bank account closures.
They will apply to contracts agreed from and including 28th April
2026, when the legislation is expected to come into
force.
The measures will be subject to certain exceptions, for example,
to enable payment service providers to comply with their
obligations under financial crime law.
The new rules will also apply to the termination of basic
personal bank accounts from and including 28th April 2026.
