New payment account termination rules come into force

The Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025 come into force on 28 April 2026, extending the minimum notice period payment service providers must give before terminating a payment services contract and requiring them to explain the reasons¹. The regulations were made by the Treasury under sections 3(1) and 84(2) of the Financial Services and Markets Act 2023 and extend to England and Wales, Scotland and Northern Ireland¹.

For contracts entered into on or after 28 April 2026, the notice of termination must be provided at least 90 days before the termination takes effect, up from the previous two months¹. For contracts entered into before that date, the existing requirement is unchanged: a provider may terminate an indefinite-period contract by giving at least two months' notice, if the contract so provides¹. The Treasury says the instrument "will not change the requirements applicable to PSP-initiated termination of contracts concluded for an indefinite period and entered into before the instrument comes into force, 28th April 2026"².

The notice must "contain an explanation of the reasons for termination which is sufficiently detailed and specific to enable the payment service user to understand why the framework contract is being terminated", and must tell the user how to complain to the provider and of any right to complain to the ombudsman scheme¹. The same reasoning and complaint requirements are added to the Payment Accounts Regulations 2015 for accounts with basic features, including where an application is refused¹.

Charges for termination must reasonably correspond to the provider's actual costs, and a provider may not charge for termination after six months of the contract¹. A customer may terminate at any time unless a notice period of no more than one month has been agreed¹. The notice requirements do not apply in certain cases, including where a provider is required to apply customer due diligence measures under the money laundering regulations and cannot do so as required, where an account must be closed under section 40G of the Immigration Act 2014, or where the provider has reasonable grounds to suspect a payment service has been used in connection with a serious crime¹. A separate exception removes the 90-day minimum where a user's conduct amounts to certain public order or harassment offences, or where incorrect information was given before or when entering the contract¹.

The government expects the legislation to cost £76.1m across a ten-year appraisal period and says it does not anticipate any costs to users of payment services². Where the customer is not a consumer, a micro-enterprise or a charity, the parties may still agree that the termination provisions do not apply².

Why it matters for households

The longer notice period applies only to contracts entered into on or after 28 April 2026, so existing current accounts and other payment contracts keep the two-month minimum unless the contract itself provides for more¹. Anyone whose provider terminates a contract signed from that date should receive a written explanation specific enough to understand the decision, plus details of how to complain to the firm and to the Financial Ombudsman Service¹. The rules sit alongside existing rights on payment services and the process covered in when your bank closes your account. Termination fees remain limited to the provider's actual costs, and no termination charge can be made after six months¹.

What happens next

The regulations take effect on 28 April 2026¹. The Financial Conduct Authority will update the guidance on contract terminations in its Payment Services and Electronic Money Approach Document to reflect the changes². The instrument does not include a statutory review clause².