The bank that closed the business account, and the 90 days that now come with it

The letter is the same one every time. A polite paragraph confirming that the bank has decided to end the relationship, a closure date, an instruction to make alternative arrangements, and no explanation of any kind. For a business that takes card payments, pays wages by direct debit and has a merchant facility tied to the account, that letter is not an administrative inconvenience. It is a countdown.

Account closures of this sort became a public argument in 2023, and the argument has now produced actual rules. From 28 April 2026, payment service providers have to give considerably more notice and, for the first time, have to say why.

What changed on 28 April 2026

The Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025 were made on 12 June 2025 and came into force on 28 April 2026. They do two things.

First, they extend the minimum notice period for terminating a framework contract — the agreement that sits behind a current account — from two months to at least 90 days. Second, they require the provider to give a clear and specific written explanation of why the account is being closed, in enough detail that the customer can understand the decision and challenge it if they think it is wrong. Citing a breach of an acceptable use policy without saying which part has been breached does not meet the standard.

The catch is in the timing. The 90-day rule bites on contracts agreed from 28 April 2026 onwards. If your business account was opened before that date, the older two-month minimum still applies to it, which means a great many established businesses are not yet covered by the headline protection they have read about.

The exception that covers the cases people care about

There is a significant carve-out, and it is worth being honest about it. Where giving notice or reasons would itself break the law — most obviously in suspected financial crime, where anti-money-laundering rules restrict what a bank may say to a customer under investigation — the explanation does not have to be given.

That means the closures most likely to feel arbitrary and unexplained are precisely the ones least likely to come with an explanation, because the bank is legally prevented from providing one. The new rules improve the ordinary cases: a bank exiting a sector, a risk appetite that has changed, a customer who has not responded to information requests. They do not, and were never going to, produce an explanation where suspicion of criminality is the reason.

The rules fix the closures that were merely rude. The closures that felt sinister are the ones the law still requires the bank to stay silent about.

Why accounts actually get closed

Very few closures are dramatic. The common triggers are mundane and, importantly, often fixable before they escalate.

The largest single category is unanswered information requests. Banks periodically refresh know-your-customer data — proof of address, details of directors and beneficial owners, an explanation of what the business does and where its money comes from. Those letters look like marketing, get filed under later, and eventually the account is restricted and then closed. Answering them promptly removes the most common cause outright.

After that: activity that does not match the account's stated purpose, such as a consultancy account suddenly processing large cash deposits; a shift into a sector the bank has decided to exit; a personal account being used to run a business; long dormancy; and unresolved disputes or fraud markers attached to a director.

The 48 hours after the letter arrives

Treat it as an operational emergency rather than a legal one, because the operational damage lands first.

Open a second account immediately, before doing anything else. Application and onboarding for a business account can take weeks, and the notice period is finite. Many businesses now run two accounts permanently for exactly this reason, and it is cheap insurance.

Then export everything: statements for the full life of the account, standing order and direct debit mandates, payee lists, and any lending or merchant agreements attached. Once an account closes, getting historical data out of a bank you are no longer a customer of is slow and occasionally impossible, and you will need those statements the next time you apply for finance — a lender's first request is almost always six to twelve months of bank statements.

Next, list every inbound and outbound payment tied to the account: customer direct debits, supplier mandates, HMRC direct debits for VAT and PAYE, payroll, card acquirer settlements, insurance. Each one needs re-pointing, and the ones that fail silently — a customer's standing order that simply bounces — are the ones that cost you money.

Finally, ask the bank for the reason in writing, referring to the requirement to give a clear and specific explanation. You may get a carve-out response. You may get something useful.

If you think it is wrong

Small businesses can complain to the Financial Ombudsman Service, which treats a business as eligible where annual turnover is under £6.5 million and it has either fewer than 50 employees or a balance sheet total under £5 million. That covers the overwhelming majority of UK companies. Complain to the bank first, in writing, then refer it to the Ombudsman if the answer is unsatisfactory.

Be realistic about the outcome. The Ombudsman can look at whether the bank followed its own process and the applicable rules, and whether the way it acted caused avoidable loss. It is far less likely to overturn a commercial decision about who a bank wants as a customer, because that decision is the bank's to make.

The lesson underneath

The banking relationship is infrastructure, and most small businesses treat it as furniture. The businesses that handle a closure well are the ones that already had a second account, kept their KYC information current, answered the boring letters, and never allowed a single account to be the only route through which money reaches the company. None of that is about being suspicious of your bank. It is the same principle as not letting one customer become a fatal dependency: concentration is the risk, whoever the counterparty is.

Common questions

How much notice does a bank have to give before closing a business account?

For payment service contracts agreed on or after 28 April 2026, the minimum notice period is at least 90 days, up from the previous two months, under the Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025. Accounts opened before that date remain on the older two-month minimum, so many established businesses are not yet covered by the longer period. Contractual terms can be more generous but not less. Separate rules apply where a bank is legally prevented from giving notice, such as where a closure relates to suspected financial crime.

Does my bank have to tell me why it closed my account?

Since 28 April 2026, providers must give a clear and specific written explanation for terminating an account, detailed enough for the customer to understand and challenge the decision — a generic reference to breaching an acceptable use policy is not sufficient. The significant exception is where giving reasons would itself breach the law, which covers suspected money laundering and financial crime, where anti-tipping-off rules restrict what the bank can say. In practice that means the most alarming closures are still the least likely to be explained, because silence is legally required rather than chosen.

Can a small business complain to the Financial Ombudsman about an account closure?

Yes, if it meets the eligibility test: annual turnover under £6.5 million, and either fewer than 50 employees or a balance sheet total under £5 million. That covers the vast majority of UK businesses. Complain to the bank first and in writing, then refer the complaint to the Financial Ombudsman Service if you are unhappy with the response or do not get one. The Ombudsman will look at whether the bank followed the rules and its own process, and whether its handling caused avoidable loss — it is much less likely to overturn the underlying commercial decision itself.

What should I do first if my bank gives notice to close my account?

Open a second business account before anything else, because onboarding can take weeks and the notice period is fixed. Then download every statement for the life of the account, along with standing order and direct debit mandates, payee lists and any lending or merchant agreements, as historical data is hard to retrieve after closure. List every inbound and outbound payment tied to the account — payroll, HMRC direct debits, card settlements, supplier mandates, customer standing orders — and re-point each one. Ask for the reason in writing, and only then consider whether to complain.