From April 2026, banks and payment service providers will be subject to stricter regulations on how and when they can close customer accounts. The new legislation aims to increase transparency and provide individuals and small businesses with greater notice and the ability to challenge decisions.

Key Changes Include:

  • Customers must be given a minimum of 90 days’ notice before an account is closed or a payment service is withdrawn—an increase from the current 60-day notice period.

  • A written explanation must be provided, clearly outlining the reasons for the closure. This measure is designed to help customers challenge decisions, including escalating to the Financial Ombudsman Service if appropriate.

These new protections are set to apply to contracts agreed from 28 April 2026 onwards. They form part of a broader government initiative to provide more certainty and security around access to banking services.

Why This Matters for Businesses

In recent years, small business owners have increasingly voiced concerns about accounts being closed abruptly, often without any prior warning or explanation. Such unexpected closures can be highly disruptive, leaving businesses with no time to lodge a complaint or find an alternative provider.

The updated rules should go some way towards addressing these concerns by improving the notice period and providing clearer communication. However, certain exceptions will remain—for instance, where an account needs to be closed urgently to prevent financial crime.

It is therefore important for both individuals and businesses to be aware of these upcoming changes. Although the new rules do not take effect until 2026, they could begin influencing banks’ approaches to account management well in advance.

See: Millions of people and businesses protected against debanking