Account closure: new notice requirements
The notice period that banks and other Payment Service Providers (PSPs) are required to give customers to close certain payment accounts is being extended to 90 days, from the current minimum of two months. The change can be linked back to the dispute between Nigel Farage and NatWest, which began in 2023 when his account with Coutts was closed. The BBC reported in March 2025 that the dispute had been settled. This followed an independent report that found NatWest had failed to communicate its decision properly when it decided to close Mr Farage's account with Coutts.
The Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025 were made on 12 June 2025 and can be found here.
The regulations amend the notice requirements in Regulation 51 of the Payment Services Regulations 2017 (PSRs 2017). The changes will come into force on 28 April 2026, and will apply to framework contracts for payment services which are concluded for an indefinite period and entered into on or after 28 April 2026. This will include current accounts and some credit and charge card accounts. It may also extend to some open-ended deposit accounts which have payment functionality. Although the changes do not apply to contracts that pre-date 28 April 2026, it is likely that some PSPs will extend the changes to their 'back book' accounts for consistency.
As well as extending the minimum notice period for termination to 90 days, the changes require PSPs to:
- provide an explanation of the reasons for termination which is sufficiently detailed and specific so that account holders can understand why their contract is being terminated; and
- advise customers how they can complain to their PSP against the termination, and any rights they may have to make a complaint to the Financial Ombudsman Service (FOS).
Exceptions
There are some exceptions that will allow PSPs to terminate either without notice, or immediately with notice. Exceptions where no notice is required include: compliance with anti-money laundering and immigration requirements; if the PSP has reasonable grounds to suspect that a payment service has been used, is being used or will be used in connection with a serious crime; or if the PSP reasonably believes that a customer has engaged in conduct that involves, or is likely to involve, the commission of an offence, where a payment service provided under the framework contract has been used in connection with that conduct.
Exceptions where immediate written notice of termination can be given relate to circumstances where the PSP considers that a customer's conduct in relation to the PSP's staff amounts to the commission of an offence linked to harassment, including threatening or abusive behaviour. Immediate notice can also be given where the customer has provided incorrect information when applying for or entering into the framework contract, in circumstances where the PSP would not have entered into that contract if the correct information had been provided.
These exceptions are set out in what will become Regulations 51C and 51D of the PSRs 2017.
Next steps for PSPs
PSPs should be reviewing their policies and procedures in relation to account termination. They should also review the wording of termination notices to ensure that they provide a reason or reasons for termination, and that those reasons are detailed and specific so that customers can understand why their accounts are being closed. That may include testing customer understanding through the use of customer focus groups.
Product terms and conditions relating to termination will also need to be reviewed and amended appropriately, not least to amend the notice period to 90 days. Any changes will need to be notified to customers in advance, usually with a minimum of two months' notice in writing prior to the changes coming into effect on 28 April 2026.
For more information, or for assistance with account termination, please contact John Lunn, Head of our Consumer Finance team.
