On 28 April 2025, there was published on legislation.gov.uk a draft of The Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025.
HM Treasury has also issued a press release in which it notes, among other things that banks and other payment service providers will be required to give customers at least 90 days’ notice before closing their account or terminating a payment service under new rules expected to come into force for relevant new contracts from April 2026.
Background
Regulation 51(4) of the Payment Services Regulations 2017 provides that a payment service provider (PSP) may terminate a framework contract concluded for an indefinite period by giving at least two months’ notice if the contract so provides.
Changes
Regulation 3 of the draft statutory instrument amends the position so that on or after the date it comes into force, 28 April 2026, PSPs who want to terminate a payment service contract concluded for an indefinite period and entered into on or after that date must instead provide the payment service user with a termination notice containing certain information including an explanation of the reasons for termination which is sufficiently detailed and specific to enable the payment service user to understand why the framework contract is being terminated. That must be given at least 90 days before the termination of the relevant contract takes effect, an increase on the previous notice period of two months.
The draft statutory instrument notes that there are certain modifications or exceptions to the new requirements including that a termination notice will not need to be provided where the PSP is required to apply customer due diligence measures under regulation 27 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and is unable to apply customer due diligence measures as required by regulation 28 of those regulations.