If there’s one thought that can keep a charity finance professional awake at night, it’s the risk of being ‘debanked’.
New rules for banks could soon help ease those concerns.
On 28 April, the government announced that, subject to Parliamentary approval, it would bring forward new legislation for banks and other payment service providers.
It would mean that banks and other service providers would have to give 90 days’ notice before closing an account. This is an increase from the two months currently required.
Banks would also need to provide a clear explanation to customers in writing, so that decisions can be challengeable.
Although the Economic Secretary to the Treasury, Emma Reynolds, made no specific mention of charities in the spring tax update announcement, the Treasury has since confirmed to CFG that the new legislation will also protect charities.
Clare Mills comments:
“Many of CFG’s members have long commented that the thought of having their bank accounts closed or frozen has been a source of serious concern. There have been countless stories of bank accounts being terminated without any reasonable warning and without clear or good reason. We therefore welcome the government’s plan to bring forward this important legislation.
“The new rules will strengthen the existing protections for charities, businesses and individuals, and will require banks to set out a clear reason for closing accounts. This requirement will also give charities the information they need to challenge those decisions.
“CFG has been working closely with UK Finance and individual banks during the past two years, and we have shared the charity sector’s concerns about the risk of debanking. In November 2024, we went one step further and published our joint research on banking services.
“This government announcement is a big step in the right direction and shows how working closely with government and the private sector can lead to positive change.”
The legislation is expected to come into effect from April 2026.
Further reading/links
Millions of people and businesses protected against debanking, April 2025 (MH Treasury press release)
Majority of charities face banking challenges, November 2024 (CFG/NCVO research)
Reducing the risk of debanking in the charity sector, April 2024 (CFG article)
Debanking complaints surge in new figures published by Treasury Committee, April 2024 (UK Parliament news)
