Last week, the UK Treasury announced legislation which would institute new protections against "debanking," requiring banks to provide clear reasons and 90 days' notice before closing accounts.
"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," said Emma Reynolds, Economic Secretary to the Treasury. “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 move responds to rising concerns, particularly among small businesses, about the opaque and sometimes abrupt nature of account closures, which can leave those businesses unable to operate and with little recourse. By mandating transparency and extending notice periods, the government aims to improve accountability in the banking sector and reduce the risk of arbitrary or discriminatory closures.
Notably, the legislation supports existing protections against discrimination based on political opinions or beliefs. This issue came to the forefront in 2023 when conservative politician and political commentator Nigel Farage accused NatWest subsidiary Coutts of closing his accounts for his political views. That scandal ultimately led to NatWest CEO Alison Rose's departure and a broader debate around politically-motivated debanking.
Some observers have warned that the new rules may push banks to tighten upfront checks when onboarding customers, as they seek to avoid future account closures that will now come with heavier procedural burdens. This risk-averse shift could make it harder for certain individuals and businesses to access banking in the first place, potentially trading one access challenge for another.
The legislation requires Parliamentary approval, after which it is expected to come into effect in April 2026.
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