De-bunking the de-banking of customers

Many will recall an issue which Nigel Farage raised in 2023 when his banking account was closed, allegedly because he did not meet his bank’s eligibility criteria, as he did not hold £1,000,000 or more in his account, following the expiry of his mortgage.

It was revealed that underlying the decision to close his account, Mr Farage’s bank took the view that his political views did not align with those of the bank’s chief executives, and so his bank did not wish him to continue as its customer. This prompted some further investigations into the justification for closing Mr Farage’s account.

A dossier subsequently released by Mr Farage’s bank’s “wealth reputational risk committee” showed that Farage was classed as a “lower risk” politically exposed person [PEP] at the time. This led to a public spat between Mr Farage and his bank which was ultimately settled out of court.

New De-Banking regulations

The Payment Services and Payment Accounts (Contract Termination) (amendment) Regulations 2025 [“the Regulations”] introduced from 28 April 2026, require banks to give a reason for “de-banking” their customers. This appears to have prompted a spate of closures of bank accounts, ahead of the Regulations coming into effect, which prompts the question of whether such closures have been justified or in accordance with the terms of contract between the customers and their banks.

The Al-Yasin v Starling Bank case

The issue was highlighted in the case of Yasin Al-Yasin v Starling Bank Limited [2025] EWHC 3582 (KB) [“the Case”]. This was heard in the Kings Bench division at the Royal Courts of Justice, and the Honourable Mr Justice Morris gave the judgment [“the Judgment”]. This decision highlighted the tension between the need to treat customers fairly and the requirement to comply with anti-money laundering (AML) regulations.

According to the judgment, Mr Yasin Al-Yasin sought an injunction against Starling Bank [“the Bank”] for closing his two accounts with the Bank. The issue was particularly important for Mr Yasin Al-Yasin, as a disabled person, as his concern was that, without a bank account, he would not be able to access payments made to him by the Department of work and pensions, which he relied upon to pay his daily living expenses.

The court in the Case applied the American Cyanamid test, namely those in the case of American Cyanamid co (No 1) v Ethicon Ltd [1975] UKHL 1, the first issue under which test was whether there was a serious issue to be tried, which equated to whether there was a reasonable prospect of success on the claim. The court found that the Case failed that test.

Under the contract between Mr Yasin Al-Yasin and the Bank, his account could be closed with two months’ notice under defined circumstances, one of which was the suspicion of using the account for criminal or fraudulent purposes, which, according to the Judgment, is what the Bank was relying upon, as it had received a Suspicious Activity report about Mr Yasin Al-Yasin from the National Crime Agency. The Court accepted that evidence and dismissed Mr Al-Yasin’s application for an injunction, although the Bank had only given 28 days’ notice to terminate Mr Yasin’s accounts: the Bank’s terms and conditions allowed immediate termination without notice where it suspected that the account was being used for criminal or fraudulent purposes.

Implications of the Al-Yasin v Starling Bank case

The Case showed the reluctance of courts to use interim powers  which would allow it to issue mandatory injunctions which would interfere with a bank’s discretion to terminate a bank account, where such closure was based upon evidentially-based financial crime concerns and was in accordance with the terms of contract between a bank and its customer.

Appealing decisions under the new regulations

Under the new Regulations, individual savers and small business owners will have to be given at least 90 days’ notice before their bank accounts are closed, increasing this from the current requirement of 2-months’ notice. There will be the need for more transparency, as banks will need to give a clear written explanation of why they have closed a customer’s account. The Treasury has stated that this will allow customers who have had their bank accounts closed by their bank to appeal such decisions to the Financial Ombudsman Service.

Of course, the new regulations may not make much difference to the Al-Yasin type pf circumstances in which the closure may have been based upon a justified basis, namely the use of an account for criminal or fraudulent purposes. However, customers who have had their accounts closed by their Bank and do not understand the reason for this or are not satisfied with the explanation given to them by their bank, ought to seek advice as to whether the closure can be challenged under the new regulatory regime.