Government published draft rules on account termination notice

The government published proposals in March 2024 requiring banks to give 90 days' notice before terminating an account and to fully explain the reason for doing so¹. The measures are intended to be in force by the end of 2024¹. The proposals follow the closure by Coutts of Nigel Farage's bank account in June 2023, after the bank raised concerns about his political views, which prompted the Financial Conduct Authority (FCA) to review account closures¹.

The draft rules would not compel banks to change how they make decisions about account closures¹. The FCA has said accounts are often closed because banks cannot carry out the "know your customer" checks required by money laundering regulations, or because they are concerned an account may be used for financial crime¹. Large banks have to offer a basic bank account to individuals, but this does not apply to organisations, which can leave them with no bank account access at all¹.

De-banking is not confined to public figures. A Treasury Committee inquiry found that eight UK banks closed over 140,000 small business accounts in the first 11 months of 2023¹.

Separately, the Financial Services and Markets Act 2023 gave the FCA powers to protect access to cash, though not wider banking services¹. The FCA consulted on rules to make cash access reviews a legal requirement and could widen the number of areas eligible for new services, and it intends these rules to be in force by the end of 2024¹. The number of bank branches and cash machines has been falling over the past decade as consumers increasingly use online banking and digital payments, which risks excluding people who rely on cash, who are overrepresented among older people and people in poor health¹.

The ATM network LINK, which is run by banks, sets higher fees for withdrawals from isolated and low-use ATMs to make running them more attractive to ATM operators¹. LINK also runs access to cash reviews when banks plan closures or if local residents ask for a review, which can result in new ATMs or banking hubs; banking hubs provide face-to-face banking services and are operated by the Post Office¹.

Why it matters for households

The 90-day notice requirement and the duty to explain a closure would apply to account terminations by banks, if the draft rules take effect as proposed by the end of 2024¹. The change concerns the process a bank follows, not the grounds on which it decides to close an account, which the measures would not alter¹. Individuals and small businesses that consider they have been de-banked unfairly can complain to the Financial Ombudsman Service if they are unsatisfied with how their bank handles the complaint¹.

On cash, the FCA's intended rules on cash access reviews, also due by the end of 2024, relate to how reviews are triggered and which areas may qualify for new services such as ATMs or banking hubs¹. People who depend on cash, a group the FCA's research identifies as overrepresented among older people and people in poor health, are the households most directly affected by branch and cash machine closures¹.

What happens next

The government intends the account termination rules to be in force by the end of 2024¹. The FCA intends its rules making cash access reviews a legal requirement to be in force by the end of 2024¹.