The new rules, which apply to new contracts agreed from 28 April onwards and also cover basic personal bank accounts, require banks to give customers a clear written explanation when closing an account, allowing them to challenge decisions through the Financial Ombudsman Service. The notice period has been extended from the previous two-month requirement.
Labour first announced the measures in April 2025 as part of efforts to prevent customers being left without access to banking services at short notice. The issue came to national prominence in 2023 after Coutts, part of NatWest Group, closed Nigel Farage's accounts — a high-profile case later found to involve assessments of his political views rather than the commercial criteria initially cited. De-banking refers to the practice of banks closing accounts or refusing to open them for certain customers, typically due to regulatory requirements, risk management considerations or profitability concerns.
Banks maintain that closures are sometimes necessary to manage risks such as money laundering, terrorism financing and reputational damage. However, concerns have been raised about instances where accounts have been shut without adequate explanation. It remains unclear what specific penalties exist for non-compliance or how the 90-day notice period will affect banks' ability to quickly close accounts for legitimate risk concerns.