The Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025

The Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025 (SI 2025/688) have been published, alongside an explanatory memorandum. The regulations amend regulation 51 of the Payment Services Regulations 2017 (PSRs) to strengthen consumer protections when banks and payment service providers (PSPs) terminate payment service contracts. Under the new rules, PSPs must now provide customers at least 90 days' notice—an increase from the two months currently required—before closing a customer's account or ending a payment service contract. They must also give a clear, specific written explanation for the termination, enabling customers to understand the decision and, if necessary, challenge it through the Financial Ombudsman Service.

The aim is to prevent arbitrary account closures, enhance transparency and support small businesses by giving them more time to secure alternative banking arrangements, reinforcing the government's commitment to economic growth and security under the Plan for Change.

The regulations also amend regulations 25 and 26 of the Payment Accounts Regulations 2015 to bring the notice period and the requirement to provide reasons for terminating basic bank account contracts in line with the updated PSRs. Banks will also need to provide reasons for refusing an application for a basic bank account.

The legislation enters into force on 28 April 2026 and will apply to contract terminations and bank account closures for contracts agreed from and including 28th April 2026.

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