Regulatory reforms designed to increase transparency and accountability in Britain’s financial services will mark a watershed moment in the UK’s debanking rules, especially for ultra-high-net-worth (UHNW) clients, experts have told Spear’s.
Recent amendments to the Financial Services and Markets Act 2000 include more protections against debanking, which are expected to take effect from 28 April 2026. The changes will not only increase transparency and procedural fairness but also provide new tools for legal recourse.
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Debanking in the spotlight
The perils of debanking hit the headlines in 2023 when Nigel Farage went public with accusations he had been ‘debanked’ by Coutts Private Bank.
The Reform UK leader was characteristically vocal about his predicament, claiming his account was shuttered ‘without explanation’. He said the move was a response to his political views.
At the time, Coutts denied this but the fallout led to then CEO Dame Alison Rose stepping down.
Two years on, changes have been made to the UK debanking regime that should make it easier for people to challenge decisions to close their accounts.
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Prateek Swaika, a solicitor advocate and partner at Boies Schiller Flexner, told Spear’s the new 90-day notice period will be ‘a powerful litigation tool’.
What is debanking?
Debanking is a commercial decision by a bank that a customer is considered a reputation risk.
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Debanking is used where there is suspicion of money laundering or sanctions. To prevent money laundering, banks are required to apply enhanced due diligence to PEPs. If sufficient evidence suggests wrongdoing or high risk, banks can close an individual’s account with limited notice and without disclosing the exact reason to the account holder.
The Farage episode placed the issue in the spotlight, but those in the private client world had long raised concerns about the compliance burden placed on the financial services sector in the handling of politically exposed persons (PEPs) and the developing regulation of anti-money-laundering measures.
Ben Keith KC, writing for Spear’s shortly after the media storm, described the practices around ‘debanking’ politically exposed persons (PEPs) as ‘opaque and create significant financial and reputational risk for HNW individuals’.
Two years on, debanking remains a ‘very serious issue’, Matthew Duncan, partner and head of private wealth at Druces told Spear’s 500 Live in May.
Will these changes improve the situation for Britain’s private bank clients?
What are the new debanking reforms?
At the core of the reforms is a requirement for banks to give 90 days’ notice before closing accounts (up from two months), a move which would create a ‘bright-line standard’, says Swaika. Although, as Emily Costello, associate at Farrer & Co, notes, ‘existing accounts opened before this date will still be subject to only two months’ notice before a bank or financial agency can close the account.’
The extended timeframe for new accounts will provide clients who enter into banking contracts on or after 28 April 2026 with a longer opportunity to seek injunctive relief in the event of their accounts being shuttered. Banks must also inform clients about their complaint procedures and provide clear and detailed written explanations so people can challenge their decisions.
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‘For our clients, these disclosures create document trails that can be weaponised in litigation when the banks fail to comply,’ said Swaika.
‘The explicit prohibition against politically-motivated closures stemming from the Farage/Coutts settlement establishes clear grounds for legal action when banks overstep. Importantly, the new rules will give clients more time to challenge decisions they disagree with and find a new bank if their account is closed.
‘For clients facing unjust debanking, these reforms provide unprecedented ammunition for both regulatory complaints and civil litigation.’
Costello said the 2025 regulations ‘also grant the Financial Conduct Authority the ability to supervise and enforce compliance with these new obligations, including by allowing the FCA to impose penalties and sanctions that it deems appropriate to regulated entities who fail to comply with these obligations.’
Swaika adds that the FCA’s tightened ‘reputational risk’ standards combined with the other elements ‘create compelling causes of action that were previously unavailable, substantially increasing settlement leverage’.
For high-profile clients, banking disputes can become PR disasters. The reforms’ emphasis on transparency and procedural fairness reduces the risk of arbitrary or poorly justified closures. As Swaika says, ‘confidential complaint procedures allow us the potential to resolve disputes without public filings that could cause unfair collateral damage to our clients’ reputations‘.
Will these changes attract HNWs to Britain’s shores?
These amendments significantly shift the balance of favour to the UK, and could encourage the UHNW individuals with cross-border banking relationships to choose private banks in Britain, reassured by the added protections.
Unlike the US, where settlements are often confidential and non-admissive, the FCA’s approach of ‘timely and visible enforcement’ enhances private litigants’ arsenal.
‘In comparison to the US, the UK appears to be moving towards a more consumer-friendly approach when it comes to debanking,’ said Costello.
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‘By contrast, the Trump administration appears to be aiming for a deregulatory trend, which includes efforts to reduce oversight of large banks in the US. With the Trump administration apparently focused on reducing the compliance burden of banks, it is unlikely there will be any additional protections put in place for consumers,’ she adds.
This could lead to wealthy US clients, particularly high-profile or political figures in the US, to seek to open bank accounts in the UK, to avail of these new protections.’
Swaika echoes Costello, telling Spear’s that wealthy US clients are recognising the ‘superior litigation position the UK banking system provides’.
‘The clear, codified debanking rules create specific causes of action with straightforward elements to prove, while explicit protections against political discrimination provide powerful statutory claims when violated. The “Great Decoupling” trend isn’t just about regulatory certainty, it’s about legal leverage. When disputes arise, UK banking relationships can provide cleaner litigation pathways with more predictable outcomes and often higher settlement values than the uncertain US system.’
