What is debanking?

There’s been something of a buzz about debanking in recent years. From banks closing down customer accounts to high-profile controversies in the UK, the once lesser-known term has been brought to the mainstream.

Let’s take a look at what debanking means, what to do if you’re debanked, and the changes that will help prevent it from happening unfairly in future.

What is debanking?

Debanking is the process where banks notify customers that the accounts they hold will be closed within a set time (currently, the legal minimum is two months’ notice), with often little to no reason given for the closure. This can be due to the account holder posing a risk to the bank, that could be reputational or regulatory, or because of suspicious activity like large overseas transactions. It can even be as simple as the customer having a dormant account with no activity for several years that’s costing the bank money to keep open.

Why have I been debanked?

There can be several reasons behind the debanking process and why a bank is closing your account. Banks aren’t currently obligated to state why they have closed your account, but this is due to change as part of the new reforms in April 2026.

Customer conduct is a possible reason. If someone is abusive to bank staff in person or over the phone, the bank can refuse to serve them in future and close their account. When the FCA investigated debanking, they didn’t find any evidence of people being debanked because of their political views – it was down to their behaviour towards staff instead.

Large overseas transactions can cause banks to be suspicious of things like fraud and money laundering. A customer may be buying property or sending money to support family members, but it could result in debanking if their bank questions the legitimacy of the activity.

There could be a much simpler explanation – an account has been left unused for a long time. When this happens, the bank will likely contact the customer to say they’ll close the account within two months unless it has some activity beforehand.

What to do if you have been debanked

If you think there’s been a misunderstanding or want clarity on why you’ve been debanked, it’s best to get in touch with your bank as soon as possible. You may be able to prevent your account from being closed if you can provide the bank with any additional information or documentation they might need.

Otherwise, the next step is to find a new account with a different bank. You should be given at least two months’ notice to assess your options and get everything transferred. If you’re replacing a current account, the Current Account Switch Service will help you move everything over securely and for free.

Your funds should be returned to you, unless there’s a suspicion that illegal activity has taken place on your account, in which case the funds will be frozen pending further investigation from the bank.

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What’s being done to prevent debanking from occurring?

New legislation is being implemented from the 28 April 2026 to help prevent debanking. Banks will need to provide 90 days’ notice before closing an account and provide a clear reason in writing. Customers will also be given the chance to challenge the decision via the Financial Ombudsman.

To recap

There isn’t currently a specific law that gives individuals or businesses an automatic legal right to hold a bank account. Some critics of debanking feel it can lead to financial exclusion in certain cases, making it harder for people to access everyday services.

But new regulations coming into effect in April 2026 are expected to place clearer boundaries on debanking. Banks will need to provide reasonable notice and a clear explanation if they decide to close an account.

As these changes are introduced, banks will continue working to balance supporting customers and businesses with meeting regulatory requirements while protecting their own legal and reputational responsibilities.