Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025

Lord Wilson of Sedgefield Excerpts

Thursday 5th June 2025 Grand Committee

Moved by

[Lord Wilson of Sedgefield]

That the Grand Committee do consider the Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025.

[Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)]

My Lords, financial services fulfil a vital role for people and businesses across the UK and the Government are committed to ensuring high standards of customer protection. These regulations form part of this commitment by strengthening protections for customers, including consumers, businesses and charities, when their bank accounts or other payment services are terminated by their provider.

While decisions to terminate services are generally commercial decisions, customers must be treated fairly. Noble Lords will be aware that concerns have been raised in this area over recent years. This has included concerns about services being terminated on the basis of customers’ lawful beliefs and political opinions. The Government are clear that customers should not see services terminated due to lawful freedom of expression. There are already laws that prohibit providers discriminating against UK consumers on these grounds. However, in other areas existing legislation does not always provide appropriate protection and is not sufficiently clear.

Currently, payments legislation contains no obligation on providers to explain why they are terminating payment services, making it difficult for customers to understand the reasons for terminations, rectify issues or know whether to bring a complaint against their provider’s decision. Furthermore, the current requirement that providers must give customers at least two months’ notice does not always provide customers sufficient time to manage the impacts of a termination and, where needed, find an alternative provider. These regulations make changes to address these issues.

Specifically, the regulations will amend the Payment Services Regulations 2017 to require providers to give customers a longer notice period of at least 90 days before terminating a payment services contract and a sufficiently detailed and specific explanation so the customer understands why it is being terminated. Providers must also advise the customer of how to complain to their provider and of any right they have to complain to the Financial Ombudsman Service. The regulations also clarify ambiguities in legislation to ensure that these new protections are applied consistently. There are some exceptions to the new requirements, mainly so that providers can continue to meet other legal requirements.

Lastly, the regulations make equivalent changes to the Payment Accounts Regulations 2015 so that people who apply for and use basic bank accounts will benefit from the new rules. These changes will increase transparency for customers, ensuring that they understand providers’ decisions and have more time and information to make a complaint or find an alternative provider. The changes will take effect from 28 April 2026 and apply to the termination of payment services contracts that are concluded for an indefinite period and entered into on or after that date.

I know that the Secondary Legislation Scrutiny Committee raised this measure as an instrument of interest in its 25th report, published on 15 May. I am grateful for the consideration the Committee has given this legislation, and I shall respond to the points it raised.

First, the Government acknowledge that there have been concerns about customers being debanked on the basis of their lawful beliefs and political opinions, and that this formed part of what initially led to a review of legislation in this area. Since coming into office, this Government have taken a fresh look at the issue from a broader perspective. As I said earlier, providers are already prohibited from discriminating against UK consumers based on their lawful beliefs and political opinions, but there are shortcomings in wider legislation that governs how providers terminate payment services contracts. The Government are therefore taking a wider approach to strengthen legislation and to enhance fairness and transparency for all customers more generally.

Secondly, regarding the length of the 90-day notice period and the implementation period for the instrument, the Government’s approach is based on extensive engagement. We have sought to balance strengthening the protections for customers with minimising the burdens on firms.

In conclusion, these regulations would make important changes to ensure that customers are treated fairly, while respecting providers’ rights to make commercial decisions. I hope that the Grand Committee will endorse these reforms. I look forward to the debate and beg to move.

[Baroness Neville-Rolfe (Con)]

My Lords, I welcome the opportunity to speak on this statutory instrument in this brief debate. We note that these regulations build on previous legislation and arise from a consultation that began under the previous Conservative Government in July 2023.

I agree with the Minister that the extension of the minimum notice period for contract termination from two months to 90 days is a prudent and welcome measure. Even more significant is the requirement for payment service providers to provide detailed and specific reasons for termination, thereby enhancing transparency and fairness and discouraging needless debanking; we all saw the unfortunate effect of Coutts’ closure of Nigel Farage’s account. Additionally, informing customers of their right to complain to the Financial Ombudsman Service is a useful safeguard.

I have two problems with these regulations. First, I am concerned by the wide-ranging exemptions to the new rules—“exceptions” is probably the right word. These include the anti-money laundering requirements and the suspicion of serious crime, as well as the possible commission of a public order or harassment offence. These are substantial exceptions that could be the subject of unfair debanking, with the accused unable to know what it is claimed he or she has done wrong. I therefore welcome the change in the threshold from “reasonable belief” to “reasonable grounds to suspect” for serious crime exceptions following consultation, but I wonder whether this is enough.

I should add that small and medium-sized businesses are not exempted from the new requirements. What targeted support or guidance will be provided to help these providers manage the increased compliance burden? These measures could cause problems for businesses already under pressure from NICs and the prospect of new regulation. We all want fairness but the net cost to businesses is £6.4 million a year, by the normally prudent Treasury estimates. This means a net present value of minus £55.4 million.

In the light of this, how do the Government plan to monitor and evaluate these regulations over time to ensure that the extended notice periods and disclosure obligations generally lead to better outcomes for consumers, rather than creating additional administrative burdens for the suppliers of financial services? Can the Government also clarify how conflicts between these termination requirements and other legal obligations on payment service providers will be managed, especially where other laws might take precedence? What mechanisms will be in place to resolve such conflicts fairly and transparently?

Secondly, the main problem for consumers of payment services is not being able to secure a bank account at all. I know this from my own family’s experience of being denied banking, reducing the scope for moving to a different, more competitive bank. This is on grounds such as being a publicly exposed person, which is our experience; selling arms, which it seems wrong to exclude given our growing defence needs; or ungrounded fear by the provider of money laundering. What is the Government’s position on this difficult area of securing a bank account?

I look forward to the Minister’s response and to continued engagement with the Government and regulators to ensure that these important reforms deliver tangible and lasting benefits for payment service users.

[Lord Wilson of Sedgefield (Lab)]

I thank the noble Baroness for her speech and those questions. These are important regulations which clarify the situation we have lived under over the last few years, as far as this issue is concerned.

On the several points and questions she has raised, I will answer the last one first, which was about access to banking services. The Government recognise the vital role that financial services provide; that is why we have introduced these new rules. The Government are focused on account closures as a priority. We continue to monitor wider access to bank account provision but recognise this is largely a commercial matter. Some 120 banking hubs have opened; another 200-plus will be opened in the next few years. That is not the limit or the target; it could go beyond that, but it depends on what LINK, which provide them, wants to do. It is, obviously, an ongoing issue. We want to ensure everybody has access to them.

On the new requirements that the noble Baroness suggested, there are important public policy reasons for the exemptions, which are necessary to enable payment service providers to continue to discharge other legal obligations or manage complex scenarios—for example, in relation to financial crime.

On the question of whether we will publish guidance, the Financial Conduct Authority, as the relevant regulator, will update the guidance to reflect the legislative changes. The Government have worked closely with industry, law enforcement and regulatory partners to ensure that expectations of payment service providers are clear.

With that, I think I have covered all the questions. I conclude by saying that the Government are committed to ensuring high standards of customer protection and financial inclusion across the financial services sector. These regulations make important changes but address long-standing concerns about protection given to customers when their bank accounts or other payment services are terminated by their providers. This increased amount of notice and transparency will make it easier for customers to understand and manage the impact of their provider’s decisions, and to make a complaint or find an alternative provider where necessary. The changes will help deliver fairer outcomes and support the Government’s ambitions to deliver for working people. I hope the Committee will join me in supporting the regulations.

[Baroness Neville-Rolfe (Con)]

My Lords, I was a little disappointed about the response on two points. One is on this business of small and medium-sized businesses. The Minister rightly referred to the FCA as the body that is responsible for guidance. It is supposed to care about small businesses and growth, following the letter that the Chancellor wrote to them. The Minister mentioned that there are more small and new businesses in the pipeline; that is good news. Small business spectacles are important, both for financial service providers and, indeed, for unfortunate customers who are trying to get bank accounts.

That was the second point: perhaps it was not possible as I did not give notice of the question, which is not the subject of these regulations, but he did not inform us as to what the latest is on helping people to open a bank account. His objective is the same as mine: to make sure that everybody can do that. He may know from discussion with other parliamentarians that the publicly exposed person issue has been a big one, and there are other issues. I would be interested to be referred to an update on how we are getting on on getting people to open bank accounts. It is important, in societies, for people to have bank accounts and not to be excluded. It is a great pity that it is so difficult, if you are a publicly exposed person, to move banks. That seems unfortunate.

[Lord Wilson of Sedgefield (Lab)]

I think these regulations help clarify all that. As far as small and medium-sized businesses are concerned, the Treasury Select Committee published figures in 2024 on the termination of business accounts in 2023. They were sourced from eight UK banks. The Treasury estimates that, on average, around 64% of business accounts were terminated due to suspicious activity or financial crime, due diligence or fraud, 10% were terminated because of dormancy and less than 1% for political exposure or other issues. We can all amplify the politically exposed people, and we know it is important, but the vast majority of closures and issues that we have are with financial crime and due diligence.

On the other question, we all want everyone who wants to have a bank account to have one. The decision to provide banking services is generally a commercial one by providers. I have already mentioned that 120 to 150, I think, banking hubs have been opened already, and a lot more will be opened. It is not a target. Once we get there, we can probably open more, but that has to be in consultation with the industry. The Government want to ensure that customers are treated fairly when providers decide to withdraw those services. We are focused on account terminations as a priority, given the material impact that a loss of banking services could have on a business already in operation. More widely, the Government continue to monitor evidence in relation to accessing banking services and welcome the FCA’s work in this area.

[Baroness Neville-Rolfe (Con)]

My Lords, I am reassured. It is good to have the figure for politically exposed debanking of 1%, although the significance depends on the total figure for the number of cases. It is more about when people are trying to get bank accounts. I think that the Farage event has led to a degree of understanding that it is important not to debank people who are already customers. What I think is less well understood is how when people who are, for example, politically exposed try to get a bank account, they have difficulties. I hope the regulators such as the FCA think about this because we want to try to make sure that people can have proper bank accounts. If there is any more material on that side of things, I give notice that I would be very interested in it, though I appreciate that I sprung this question on the Minister today although it is not the subject of the regulations.

[Lord Wilson of Sedgefield (Lab)]

I think increasing the time period from 60 days to 90 days and banks now having to write to the customer to say, “These are the reasons why we have this issue with your bank account” and, where it is appropriate and where they can, having to say that they can refer it to the ombudsman all helps. Obviously, this will be kept under review, but I think it is an important improvement on where we were in previous regulations.

Motion agreed.

Devolved Authorities: Use of Resources

Lord Wilson of Sedgefield Excerpts

Wednesday 23rd April 2025 Lords Chamber

[Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)]

The UK Government primarily use the Barnett formula to calculate the devolved Governments’ block grant funding. This funding is not ring-fenced, given the devolved Governments’ full flexibility to allocate it across devolved areas according to their own priorities and local circumstances. The devolved Governments are accountable to their parliamentary legislatures and, ultimately, their voters for their decisions. The recent settlement is 20% more funding than equivalent UK government spending in other areas of the UK. These settlements are the largest in real terms since devolution, totalling £86 billion. This Government are securing Britain’s future through the plan for change, which is delivering security and renewal by kick-starting economic growth to put more money into working people’s pockets and the NHS and to secure our borders.

[Lord Foulkes of Cumnock (Lab Co-op)]

I am grateful to the Minister for a helpful response, but is he aware that the Supreme Court case on the definition of gender is just the latest of 10 court cases which the SNP Scottish Government have taken there, costing over £7 billion? Surely something can be done to make sure that they spend UK taxpayers’ money on things such as the city growth deals and replacing the Grenfell-style cladding on the 5,000 premises in Scotland where people’s lives are still in danger.

[Lord Wilson of Sedgefield (Lab)]

I thank my noble friend for that question. I want to focus on the big issue that is confronting this country—whether it is Ireland, Scotland, Wales or England—which is growth. My noble friend pointed out that the city region and growth deals are funded by the UK Government. The Scottish Government are receiving £119 million in 2025-26 for city and growth deals. The Government confirmed at the Autumn Budget that investment in the Argyll and Bute growth deal will continue to be available and will be supported by a rigorous value-for-money assessment as part of the review. The £25 million Argyll and Bute growth deal was signed in March 2025. There are other elements to growth in Scotland: one of the main ones is that GB Energy will be based in Aberdeen.

[Lord Wigley (PC)]

My Lords, I welcome the statement made by the Minister that it is indeed for the devolved authorities to spend the money that they receive in accordance with their own priorities. He mentioned the Barnett formula; will he admit that whereas it may be working very well for Scotland, it is not working well for Wales, and it certainly needs to be reconsidered? Will the Government please address that?

[Lord Wilson of Sedgefield (Lab)]

Because of the Barnett formula, Wales receives 15% more than the average for the rest of the UK. We also need to point out some of the advantages of the Welsh and UK Governments working together. Under the AI opportunities action plan, Vantage Data Centers, which is working to build one of Europe’s largest data centre campuses in Wales, announced plans to invest £12 billion, providing 11,000 jobs across Wales. There are also expected benefits in direct payments for 150,000 workers in Wales through the minimum wage rise. There are 2.1 million people in Wales who will benefit from the extension of the 5p cut in fuel duty.

[Lord Forsyth of Drumlean (Con)]

My Lords, will the noble Lord—I appreciate he is new to his post—take time to read the Select Committee of this House’s report on the Barnett formula? From that he will find that Wales is indeed badly treated, and no Government have actually done anything about it. On the main point of the Question, which is the right of devolved Administrations to spend the money that is allocated to them under the formula as they choose, that is an important part of devolution, which the noble Lord was very keen on. Had it not been for that, the Scottish Government would not have been able to waste tens of millions of pounds on ferries that do not work—money which would otherwise have been spent on the health service.

[Lord Wilson of Sedgefield (Lab)]

The Barnett formula does succeed in delivering for our nations around the country. It is fair to say also that the settlement this year is the largest that has been delivered since devolution.

[Lord Bruce of Bennachie (LD)]

My Lords, since the establishment of the Scottish Parliament, the proportion of income raised from taxes on Scottish citizens has risen from under 10% to around 40%. The Scottish Finance and Public Administration Committee has agreed that accountability and scrutiny need to be improved. I suggest that it might be to great mutual benefit if the Public Accounts Committee in the Commons and the Constitution Committee in this House reach out to relevant committees in the Scottish Parliament and the other devolved assemblies to see how they can improve financial scrutiny and accountability across all our parliaments, because none of it is as good as it should be.

[Lord Wilson of Sedgefield (Lab)]

I thank the noble Lord for that question. I think there is nothing wrong and probably everything right with parliaments across the UK working together to deliver better for their citizens. I think that is probably a welcome suggestion.

[Lord Inglewood (CB)]

My Lords, following the question asked by the noble Lord, Lord Wigley, about Wales being short-changed by the Barnett formula, is it not also the case that the north of England is in the same way?

[Lord Wilson of Sedgefield (Lab)]

I thank the noble Lord for that question because it gives me the opportunity to talk about the excellent work that the Labour Mayor of the North East is doing, in the form of Kim McGuinness. At the centre of her project for the north-east are growth, delivering better public services and ensuring that the growth that happens in this country and our region where I belong is there for all the people. I lived through the 1980s. I know what happened to areas such as the Durham coalfield. Now that the region is united to speak up as one, that can be only for the benefit of all the people who live there.

[Baroness Neville-Rolfe (Con)]

My Lords, achieving value for money ought to be a priority for any Government, whether national, regional or local, especially a Government committed to growth. So I come back to the point mentioned by the noble Lord, Lord Foulkes of Cumnock: do the Government consider that the SNP Scottish Government’s actions on trans rights represented a good use of taxpayers’ money?

[Lord Wilson of Sedgefield (Lab)]

I appreciate the question that the noble Baroness has asked, but I think that the one thing that should focus our minds, besides the outcome of what the Supreme Court said, is what the Scottish Government should do, and we all should be doing, in the best interests of all the Scottish people. That must be to secure growth to make sure that the support that we have for our cities, our people and the NHS is for all the people in Scotland. It would be great to see the Scottish Government and the UK Government work closely together to ensure that that happens.

[Lord Jones of Penybont (Lab)]

My Lords, as the former head of a devolved Government, at a time when co-operation between Governments across this island was rare and when a UK Government towards the end of their life became very fond of imposition through the UK Subsidy Control Act and the UK Internal Market Act, I welcome the new relationship between London and Cardiff. With that in mind, will the Minister outline what the UK Government are doing, working with the Welsh Government, to deliver for the people of Wales?

[Lord Wilson of Sedgefield (Lab)]

I thank the noble Lord for that question. I have already mentioned some of the things that the Labour Government have done, but two areas that might be of interest to the House are what is happening in Port Talbot, and the electric arc furnaces. In the Autumn Budget 2024, the UK Government confirmed £80 million funding for the Port Talbot transition board. The funding will support local businesses that are heavily reliant on Tata Steel, and their primary customers. On 11 September last year, this Government announced that they had agreed an improved deal with Tata Steel towards the transformation of Port Talbot steelworks. This improved deal secures 5,000 jobs, ensures that workers have enhanced support during the transition period and delivers a 1.5% reduction in the UK’s greenhouse emissions.

[Baroness Fraser of Craigmaddie (Con)]

My Lords, I run a charity in Scotland, and if somebody gave me £119 million, I would be expected to account for how I spent that money. So, going back to the Question asked by the noble Lord, Lord Foulkes, can the Government do anything that does not interfere with how the devolved Administrations choose to spend their money but requires them to report transparently on what it is they have spent it on?

[Lord Wilson of Sedgefield (Lab)]

The UK Government and the Scottish Government need to work closely together on this issue. Obviously, we cannot get involved in how devolved Barnett money is being used, but there is ring-fenced money that has been allocated to Scotland, I think somewhere in the region of £119 million, and we need to ensure that it is spent properly, at the appropriate time, and gives value for money.

Child Trust Fund Accounts

Lord Wilson of Sedgefield Excerpts

Wednesday 19th March 2025 Lords Chamber

[Lord Blunkett (Lab)]

I beg leave to ask the Question standing in my name and offer a very warm welcome to my noble friend, who is making his first appearance at the Dispatch Box.

[Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)]

I thank my noble friend. The Government have extensive engagements with providers, industry and other stakeholders. HMRC is an active participant in the industry-led Child Trust Fund Maturity Working Group, which meets quarterly and discusses how individuals can be encouraged to claim their matured funds, and any issues the industry is facing. Treasury officials have also recently met with industry stakeholders to discuss issues relating to child trust fund access.

[Lord Blunkett (Lab)]

I thank my noble friend and realise that it is really difficult answering for the Treasury these days. We have had a very successful, but in one way fruitless, effort across this House. We have been supporting many charities, including Support SEND Kids, and Andrew Turner’s campaign—he is in the Chamber today. I thank everybody for that. Some 780,000 accounts have not yet been accessed, and in up to 80,000 of those cases, the young people are said to have incapacity. Somehow, we have to unlock these accounts, and we have to stop the Court of Protection blocking this. We have to ensure that financial institutions that are not playing the game do so. In the end, we need the support of the Department of Justice, the Department of Work and Pensions and the Treasury. My noble friend is new, and he can come at this fresh: give them a good kick for us, will you?

[Lord Wilson of Sedgefield (Lab)]

The Government are committed to reuniting all young adults with their child trust funds. HMRC has worked closely with child trust fund providers to encourage young people to track down their accounts. It has also issued a range of communications, including social media posts, and engaged influencers, who have greater visibility amongst young adults, and it continues to explore additional ways of communication. A free HMRC online tracking facility is also available. At the moment, the number of unclaimed matured accounts stands at 670,00.

[Lord Young of Cookham (Con)]

My Lords, the Department for Work and Pensions has a streamlined process by which parents of a child with disability can access funds from the DWP—funds far higher than the average £3,000 in a trust fund account. Why cannot that process be used, instead of the cumbersome Court of Protection process?

[Lord Wilson of Sedgefield (Lab)]

We know that there are real difficulties with this, and cross-departmental activities are taking place to try to resolve the problem. I understand from the courts that the Government are committed to bearing down on the outstanding caseload left by the previous Government, and the challenges we face in doing so are significant. As a crucial first step, we are funding another 108,500 sitting days in the courts this financial year, which is the highest level we have had for a decade.

[Baroness Kramer (LD)]

My Lords, in cases where a parent or guardian were unable to set up an account for their child, the Government opened a savings account on the child’s behalf. Can the Minister give me an assurance that all these children, for whom HMRC must have both contact details and legal authority, have been reached and are not part of the group who are unaware of the funds they have available?

[Lord Wilson of Sedgefield (Lab)]

All young people who have trust funds are contacted at the age of 17, and those who do not respond will be continually contacted. Secondly, the funds available to them will be available for ever or until, potentially, things change; but at the moment, there is no reason why that should happen. Those funds will be there for as long as they need to be, before they are drawn down by the child. The one thing to remember is the funds not having been accessed does not mean that the person who can access them does not know they are there.

[Lord Naseby (Con)]

I declare an interest as a former chairman of the Tunbridge Wells Equitable Friendly Society, which traded as the Children’s Mutual. Are the Government getting full co-operation from the Association of Friendly Societies and some of the other providers? If they are not, I would be more than willing to try my very best to help to find an answer to this difficult problem.

[Lord Wilson of Sedgefield (Lab)]

We are working across departments and with all the providers to try to ensure that access is gained for people who have child trust funds. I am not quite sure what kind of relationship and communication we have with friendly societies, but I will make sure that someone writes to the noble Lord to let him know.

[Baroness Neville-Rolfe (Con)]

My Lords, I too very much welcome the noble Lord, Lord Wilson of Sedgefield, to his place. There is a problem, as he said, so can he say whether he has formally consulted, or intends to, the financial institutions or the child trust fund providers on the feasibility of simplifying the process for young people accessing their funds? What steps might he take to ensure that they are more aware of the child trust fund accounts—perhaps using social media and so on—so that we communicate this opportunity for people to pick up these funds, which are not being claimed, as the noble Lord, Lord Blunkett, explained?

[Lord Wilson of Sedgefield (Lab)]

As of 5 April 2024, some 2.5 million child trust funds accounts and 670,000 mature child trust fund accounts had not been claimed. The Government recognise the importance of ensuring that we marry up young people with those accounts. HMRC is working very closely with opinion-formers and stakeholders to try to ensure that this group is reached. This includes, for example, working closely with UCAS, joining with younger influencers who discuss personal finances online, and using traditional media and HMRC’s own social media channels to target young people to ensure that they know the trust funds exist.

[Baroness Lister of Burtersett (Lab)]

My Lords, I very much support my noble friend in his efforts, but as there do not seem to be any more questions on that subject, I will broaden it out to another of the Treasury’s responsibilities for children. I realise that my noble friend may not be able to answer this now, but is there any evidence of the impact of the high-income charge, introduced by the previous Government, on the take-up of child benefit? Child benefit is a crucial source of secure income for parents.

[Lord Wilson of Sedgefield (Lab)]

I thank the noble Baroness for that question, and she is absolutely right: it is not an area I know very much about. I will get the department to write to her with the answer she requires.