Abdulali Jiwaji and Nikara Rangesh examine the regulatory scrutiny of debanking in Financial Regulation International

Abdulali and Nikara's article was published in Financial Regulation International, 30 June 2026, here.

Amid allegations of politically motivated debanking and increased regulatory scrutiny, a recent High Court decision considered potential tensions when banks close customer accounts.

Last year, in Yasin Al-Yasin v Starling Bank Limited [2025] EWHC 3582 (KB), the High Court refused to grant injunctive relief preventing Starling from closing a customer's accounts.

The claimant held two Starling accounts. Under the account terms, Starling had an unlimited right to close the accounts on two months' written notice. The terms also allowed Starling to close the accounts without notice if the customer was suspected of using them for criminal or fraudulent purposes.

In December 2025, Starling restricted the claimant's accounts giving him 28 days' (rather than two months’) notice of its intention to close them. Following exchanges with the claimant, the bank granted an additional two weeks before the accounts would be closed.

A day before that extension expired, the claimant applied for a mandatory injunction preventing Starling from closing his accounts. The application was heard within 24 hours.

In addition to alleged breach of contract, breach of the Equality Act 2010, and failure to make reasonable adjustments for disability, the claimant asserted that information which Starling allegedly shared with Halifax had prevented him from opening an alternative account. He further argued that he relied on the accounts to receive Department for Work and Pensions payments and he had insufficient time to make alternative arrangements.

Starling relied on the account terms: where it suspected criminal or fraudulent use of an account, immediate closure was expressly permitted. At the hearing, the bank confirmed it had received notification from the National Crime Agency (NCA) of a Suspicious Activity Report (SAR) concerning the claimant's account.

The injunction application was dismissed by The High Court which applied the well-established American Cyanamid test, holding that there was no "serious issue to be tried".

On the breach of contract claim, the Court accepted that where criminal or fraudulent use was suspected, Starling's terms entitled it to close the account immediately. Significantly, the Court held that the SAR notification provided "a sufficient basis to satisfy the requirement that the Defendant suspects that the account holder is using the account for criminal or fraudulent purposes". Starling was therefore entitled to close the account without notice, which was a complete defence to the breach of contract claim.

The claimant alleged that Halifax had refused to open an account for him because Starling provided misleading information to them. The Court rejected the allegations and found there was no evidence that any communication by Starling was misleading or false.

The Equality Act claims also failed. The Court held that such claims were not properly before the High Court and there was insufficient evidence of discrimination or a failure to make reasonable adjustments. Notably, the Court observed that, following the customer's concerns regarding the impact of account closure, Starling had granted additional time. Additional evidence that DWP payments could still be accessed reduced the urgency and prejudice asserted by the claimant.

Regulatory Overlay

The Starling decision follows increased regulatory scrutiny of account closure decisions. In June 2023, Coutts closed an account held by Nigel Farage. In the wake of the ensuing controversy, the Financial Conduct Authority (FCA) reviewed data collected from 34 financial institutions to determine whether banks were closing customer accounts because of their political beliefs or views. In September 2023, the FCA noted that their investigation did not suggest that account providers had terminated customer accounts because of their beliefs or other lawfully expressed views.

Regulators continue to recognise the importance of banks' anti-money laundering (AML) and financial crime obligations. In September 2024, the FCA published a follow-up report providing guidance on its expectations that when making decisions about account access and closure, firms balance their AML obligations with their wider consumer protection obligations.
The FCA report emphasised that account access and closure decisions should be made on reasonable and properly considered grounds rather than applying a generic risk-based approach. In addition, firms should:

• Maintain records of these decisions to facilitate effective oversight and governance.
• Act proportionately in applying financial crime controls.
• Pay particular attention to the fair treatment of vulnerable customers throughout the onboarding and offboarding processes.

Since July 2023, the FCA’s Consumer Duty has required firms to deliver good outcomes for their retail customers. For example, as part of this it is incumbent on banks to ensure that customers are informed of the scope for applying for a Basic Bank Account (BBA) if eligible. These are "no-frills" current account intended to meet basic banking needs, designed for UK personal customers who are otherwise ineligible for an account. The FCA expects a holistic approach, including a proportionate response to any risks identified, particularly in the context of account access.

Further regulatory changes have also come into effect through amendments to the Payment Services Regulations 2017 and the Payment Accounts Regulations 2015.

For accounts opened on or after 28 April 2026, firms must provide a minimum of 90 days' notice before closing an account. This extends the previous 60-day notice requirement that continues to apply to accounts opened before that date.

The new rules also require banks to provide a clear written explanation of why they have closed a customer's account. This offers potential scope for customers to "appeal" to the Financial Ombudsman Service.

The regulations still make an exception to the mandatory notice period in the event of money laundering concerns. This includes where a bank:

• cannot apply customer due diligence measures required by the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 ;
•  has reasonable grounds to suspect their service has been used, is being used or will be used in connection with a serious crime ; or
• reasonably believes that a customer has committed an offence and that their services have been used in connection with that conduct.

If a Payment Service Provider (PSP) wants to rely on an exception to close an account without giving notice - for example, that reasonable grounds exist to suspect that the account is being used in connection with a serious crime, good record keeping will be crucial to evidence the thought process.

Practical Lessons

Collectively, these developments confirm that banks will be supported in closing accounts where there are genuine AML and financial crime concerns, and in light of tipping off restrictions under the Proceeds of Crime Act 2002 (POCA). Where a suspicious activity report has triggered legitimate concern, courts are unlikely to question a bank's decision-making process.
The regulatory reforms enhance customer protections and transparency, and preserve each firm’s ability to respond to the risk of financial crime.

Debanking decisions should be appropriately documented and supported by a clear evidential basis. If the records do not address risk factors and assessments underpinning the decision, and instead default to a broad or generic analysis, rather than considering the unique circumstances of the individual customer relationship, then there may be a basis for challenge.

Banks should also seek to ensure that customer terms expressly address AML and fraud-related obligations, reserving suspension and closure rights. Where these depart from regulatory expectations, and lack of clarity, there will also be scope for challenge.