Emma RadmoreThe Payment Services and Payment Accounts (Contract Termination)(Amendment) Regulations 2025 have been made and will come into force on 28 April 2026. We reported on the draft Regulations when they were laid before Parliament in April.
As a reminder, the changes will apply to any framework contract for payment services entered into on or after a date now confirmed as 28 April 2026 where the agreement is for an indefinite period, and primarily:
- extend the minimum notice period providers must give for terminations to 90 days (with exceptions);
- require the provider to give enough detail so customers can understand the reason for the termination; and
- require the provider to tell the customer of any rights they have to complain to the FOS.
Mirroring changes apply to accounts with basic features to which the Payment Accounts Regulations apply.
Customers can still terminate the contract at any time unless they have agreed with the provider a notice period, but that cannot be more than one month.
HM Treasury had published a draft for comment in 2024, and as a result had amended the legislation to clarify that the threshold for using the exemption for where firms suspect serious crime is one of having “reasonable grounds to suspect”, rather than the originally proposed, higher “reasonable belief” standard. Other changes allowed an exception in the case of specified public order or harassment offences, and for situations where the PSP had been provided with incorrect information where, had the information been right in the first place, the PSP would not have entered into the contract at all. What has not changed is the confusing wording of the Regulations in relation to contracts entered into before 28 April 2026, where the notice period is still “at least 2 months’ notice, if the contract so provides” – the last phrase has caused particular confusion and has been used by some PSPs to provide shorter notice.