New rules to protect against de-banking: what payment service providers need to know

HM Treasury has finalised measures designed to curb de-banking. New legislation adds new conditions for banks, e-money firms and other payment service providers when terminating certain contracts with customers. Firms have until 28 April 2026 to implement the changes.

New legislation

The Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025 have been laid before Parliament. The regulations were first published in draft last year.

New measures

The regulations amend existing requirements on termination of contracts under payment services and payment account legislation. The latest changes include:

• Longer notice period: Banks and other payment service providers must give at least 90 days’ notice before terminating an account or payment service (up from the current two months) so that customers have more time to challenge the decision or find an alternative provider.
• Clear explanations: Payment service providers must explain to the customer why the contract is being terminated with reasons that are sufficiently detailed and specific. They must also say how customers can make a complaint against the termination.
• Limited exceptions: There are some exceptions to these rules, including to enable payment service providers to comply with their obligations under financial crime law.

Next steps

The new rules will apply to contracts agreed on or after 28 April 2026, when the legislation comes into force. This gives banks, e-money institutions and other payment service providers just over a year to update their practices and meet the new requirements.

To prepare for the new rules, payment service providers should:

1. Revise internal policies: Update termination procedures to reflect the longer notice period and ensure detailed written explanations are provided.
2. Train staff: Equip employees to deliver plain-language notices and support impacted customers.
3. Establish mitigation strategies: Develop processes to support customers during the 90-day notice period, such as guiding them on next steps or alternative services, taking into account the Consumer Duty where relevant.
4. Establish exception processes: Anticipate how to manage cases where exceptions to the rules may be relied upon.

Catalyst for tighter rules

These changes follow high-profile cases where individuals have had their bank accounts closed. In its press release, the government explains that the changes will also protect small businesses' access to banking services.