New UK bank account closure rules are now in force, requiring HSBC, NatWest, Lloyds and others are to give customers a minimum of 90 days’ notice if their accounts are going to be closed
Several of Britain’s largest lenders are poised to encounter a shift today. Fresh regulations concerning the de-banking of customers are taking effect.
HSBC, Natwest and Lloyds are amongst the banks that must adhere to the new changes. The regulatory overhauls are intended to provide customers with enhanced protections when their accounts are terminated.
The new rules – coming into force from today (April 28) – demand banks and payment service providers give at least 90 days’ notice before shutting down a payment service, increased from the earlier two-month stipulation. Customers will be afforded additional time to challenge decisions if they believe their account has been unjustly closed.
Banks will also be required to supply a written justification, allowing customers to lodge an appeal via the Financial Ombudsman Service. De-banking happens when banks opt to shut or refuse to establish accounts for particular customers, usually owing to their own regulatory limitations, and can impact both enterprises and individuals, as reported by City AM.
Prominent de-banking incidents have captured headlines in recent years, particularly the contentious affair involving Nigel Farage and Natwest. The Farage de-banking scandal eventually led to the departure of Natwest chief executive Alison Rose, following Coutts – a private bank owned by the Natwest group – marking the politician as a politically exposed person (PEP).
PEPs refers to individuals who hold public office and are therefore subject to additional scrutiny by financial institutions. Farage has maintained his account was shut down unjustly because the bank objected to his personal and political beliefs.
On the other side of the pond, political de-banking controversies have escalated. In January, Donald Trump lashed out at JP Morgan for “inappropriately” discriminating against him. This followed the President’s allegations that America’s largest bank ceased providing him with services after the Capitol riots on 6 January, reports the Mirror.
Unveiling the new regulations in the UK, the government stated they would give customers enhanced opportunities to contest account closures and obtain alternative banking services.
For the latest breaking news and stories from across the globe from the Daily Star, sign up for our newsletters.