De-banking refers to providers closing, or refusing to open, an account for certain customers and has been the subject of some controversy in recent years, most notably when Reform UK leader Nigel Farage threatened legal action after NatWest Group closed his account with its private banking arm, Coutts, in 2023.
In the last financial year, around 4,000 complaints about de-banking were made to the Financial Ombudsman.
Here, Which? explains what the new de-banking rules mean for you and shares the steps you should take if your bank decides to close your account.
What are the new rules for bank account closures?
Under current rules, banks only have to give you two months' notice if they want to close your account or terminate a payment service and they don't have to tell you why.
New government rules will increase the notice period to 90 days and banks will be expected to provide a clear explanation in writing. The Treasury has said that this will give people and businesses the time and information needed to challenge decisions, and to find a new bank.
This doesn’t apply to cases of suspected fraud, as banks don’t have to give a minimum notice period if they think your account is being used for criminal purposes.
The Treasury announcement states that the rules 'apply to contracts agreed from and including 28 April 2026, when the legislation is expected to come into force'.
Which? has learned that it will be for providers to decide whether to apply the new requirements to relevant contracts entered into before this date, which means existing bank customers may still be subject to the old rules.
Complaints about de-banking
The TelegraphBanks can generally close any accounts they like. However, they must treat customers fairly. This means giving reasonable notice and never closing accounts due to unfair bias or unlawful discrimination, such as race, religion and political beliefs.
Businesses and individuals can take complaints about bank account closures to the Financial Ombudsman Service (FOS). Its figures show that complaints about de-banking jumped from 2,683 in the 2022-23 financial year to 3,858 the following year. The uphold rate also increased from 27% to 36%, meaning more investigators or ombudsmen found in favour of the complainant (the customer).
We asked the FOS for the 2024-25 figure, which shows that complaints have broadly stabilised at around 4,000. It couldn’t provide an uphold rate, as the data is unpublished.
The FOS said: ‘Account closures should always be carried out in line with the bank’s terms and conditions, and its wider obligations. If consumers are concerned that they haven't been treated fairly, they should contact us and we'll see if we can help. We are a free, independent service set up to resolve financial disputes informally and fairly. Each case is investigated on its own merits.’
Find out more: .What to do if your account is closed
While banks should always act swiftly to prevent financial crime, which includes freezing and closing accounts due to suspicious activity, they must take steps to avoid blacklisting the wrong accounts.
Even if you think your account has been closed unfairly, it’s unlikely your bank will reverse its decision, but you can limit the stress it causes by following these six steps:
Make alternative arrangements Complain Look for Cifas markersChallenge markers Be careful with applicationsSpeak to providers Find out more.source https://www.which.co.uk/news/article/new-de-banking-rules-to-protect-customers-from-unfair-closures-aj41N3q2of43