Government to toughen debanking rules with more notice required for closing accounts

Banks and other payment service providers will be required to give customers at least 90 days' notice before closing their account.

The new rules, which are expected to come into force from April 2026, are an increase on the current two months, and are aimed at protecting consumers and small businesses from so-called debanking.

Several business owners have reported their account being closed without reason and at short notice which has left them no time to complain or find a replacement bank.

Under the changes, banks will also need to provide a clear explanation to customers in writing, so they can challenge decisions, such as through the Financial Ombudsman Service. 

Economic secretary to the Treasury, Emma Reynolds, 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 government says the new legislation will support existing rules, including those which prohibit a bank from discriminating against a UK consumer based on political opinions or beliefs when accessing an account.