In 2023, the closure of Nigel Farage’s account at NatWest-owned Coutts Bank ignited a political storm and highlighted serious concerns about the risks of debanking and politically motivated account closures.
This incident drew widespread attention and spurred discussions about the power that financial institutions hold over individuals’ access to banking services. In response to the controversy, which was widely covered by media outlets like GB News, the UK Labour Party has introduced a new set of regulations.
These rules are designed to offer stronger protections for both individuals and businesses who may face unexpected account closures, ensuring fair treatment and greater transparency.
New Regulations to Ensure Transparency
The UK government is now requiring banks to provide at least 90 days’ notice before closing an account, a substantial increase from the current two-month notice period. This is part of the government’s broader Plan for Change, with these changes set to take effect for new contracts starting in April 2026.
These regulations will apply to banks, building societies, and payment service providers throughout the UK.
Under the new legislation, banks will be required to provide a clear written explanation for any account closure, ensuring customers can understand the reasons behind the decision. This transparency will allow customers to challenge closures they disagree with, including by seeking assistance from the Financial Ombudsman Service.
The extended notice period will provide more time for customers, including Nigel Farage, to contest the decision or arrange alternative banking services.
Impact on Small Businesses
Small businesses have been particularly vocal about the abrupt closure of their accounts without adequate notice. These businesses often face difficulties finding replacement services in a short timeframe.
The new regulations are designed to prevent such situations, ensuring businesses have more time to secure new banking arrangements.
Economic Secretary to the Treasury, Emma Reynolds, said :
Delivering economic security for working people is at the heart of our Plan for Change and 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.
This move by the Labour government is seen as a direct response to incidents like the Nigel Farage case, where individuals were left with little time to contest account closures.
A Focus on Political Neutrality
The regulations also address concerns about politically motivated account closures. Banks will now be prohibited from denying UK residents access to payment accounts based on their political beliefs or opinions.
This is a key feature of the legislation, particularly in light of the Farage incident. The changes aim to ensure that individuals are not unjustly denied access to banking services due to their political affiliations or views.
The legislation also strengthens existing protections against discrimination, ensuring that all UK residents have equal access to banking services. This move is intended to safeguard the rights of individuals like Nigel Farage, whose account closure raised questions about the role of political beliefs in banking decisions.
Exceptions for Compliance With Financial Crime Laws
While the new regulations will come into effect in 2026, there are certain exceptions. Payment service providers will still be required to comply with financial crime regulations, which may necessitate some closures.
However, these cases will need to be justified and are subject to regulatory scrutiny to prevent abuse.
The changes are aimed at ensuring that customers are treated fairly and have ample opportunity to challenge decisions that may be politically motivated or unfair.
These new rules will impact individuals, including Nigel Farage, and businesses across the UK, providing greater transparency and fairness in banking practices.
