Labour is tightening the rules around debanking to protect customers in light of Nigel Farage’s high-profile row with NatWest, requiring banks to explain closure decisions in writing and allow them to be challenged. The Telegraph has more.
The Treasury has announced that banks will be required to give customers 90 days’ notice, up from two months, before closing accounts under new rules expected to come into force from April 2026.
Customers must also receive a clear explanation in writing, allowing them to challenge the closure through the Financial Ombudsman Service if necessary.
It comes after figures from the Financial Conduct Authority (FCA) – obtained by the Telegraph – revealed half a million customers were debanked last year, the highest number in over a decade.
Emma Reynolds, Economic Secretary to the Treasury, said: “Strengthening protections against debanking will protect people’s and businesses’ access to banking services.
“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 Treasury said small businesses will also be better protected after firms complained about accounts being closed without reason, leaving them no time to challenge or find a replacement bank. But, there are growing concerns that banks are misusing their powers.
Nigel Farage, leader of Reform, was involved in a high-profile debanking dispute after private bank Coutts closed his account in 2023. He claimed it was closed over “ideological” reasons.
The scandal led Alison Rose, then-chief executive of NatWest, to resign.
NatWest since paid Mr Farage an undisclosed sum to settle the dispute. The Clacton MP said in a joint statement with the bank that the problem was “resolved and settled”.
An estimated 408,000 bank accounts were shut down last year, compared to just 45,091 in 2016-2017, FCA data showed.
Mr Farage told the Telegraph at the time: “These numbers are appalling. The last government promised me there would be changes but nothing happened.”
He added: “The FCA does not protect innocent customers who are debanked either.”
Worth reading in full.
Toby tweets that it’s “great to see these changes” that the FSU campaigned for and which “would have happened last summer but for the snap election”.
Conservative MP Andrew Griffiths claims victory for his and Toby’s campaign:
Victory for the campaign against de-banking which I led as City minister with [Toby Young] of the [Free Speech Union]. These new rules force banks to give longer notice, clear reasons for de-banking and more ability to fight back. Not perfect but a real step forward.
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