Framework contract termination: new PSRs 2017 regs 51 to 51D from 28 April 2026
In short: Framework contract termination by UK payment service providers operates under a new architecture from 28 April 2026. Closing a customer account opened on or after that date now requires 90 days’ written notice, sufficiently-detailed reasons and Financial Ombudsman Service signposting. Five carve-outs in regulation 51C and a fast-track regime in regulation 51D sit alongside.
For a UK payment service provider preparing to terminate a customer’s framework contract from 28 April 2026, the legal position has been reset. The Payment Services and Payment Accounts (Contract Termination) (Amendment) Regulations 2025, SI 2025/688, substitute regulation 51 of the PSRs 2017 with new regulations 51 and 51A to 51D and amend parallel rules on basic bank accounts in the Payment Accounts Regulations 2015. The May 2026 version of the FCA Approach Document, published on or around 7 May 2026, sets out the FCA’s first supervisory reading of the new architecture at paragraph 8.98 of chapter 8.
What is a framework contract?
A framework contract is the standing agreement between a payment service provider and its customer that frames a continuing payment service relationship. Regulation 2(1) of the PSRs 2017 defines it as “a contract for payment services which governs the future execution of individual and successive payment transactions and which may contain the obligation and conditions for setting up a payment account”. In plain English, it is the ongoing terms of business under which the customer’s bank account works, a merchant’s card acceptance arrangement operates, or an e-money account is run.
The defining feature is continuity. A framework contract is not the individual payment itself but the standing relationship that sits over every future payment under it. When a consumer transfers funds from a current account, the transfer is a single payment transaction and the document governing it is the framework contract, in the form of the account terms and conditions. The framework contract sits in contrast to a “single payment service contract”, also defined in regulation 2(1): a one-off contract for a single payment transaction with no continuing relationship behind it, such as a walk-in money transfer. Single payment service contracts are outside regulations 51 to 51D entirely.
The framework contracts a PSP compliance team typically encounters are bank current account terms; e-money account terms at neobanks and prepaid card issuers; cardholder agreements; merchant acquiring agreements; money remittance terms where the customer has a standing user profile; and open banking service terms. Basic bank account terms opened under the Payment Accounts Regulations 2015 are a sub-species of framework contract with their own parallel rules, addressed separately below.
The new framework contract termination architecture: regs 51 to 51D
The amending SI does not patch the old regulation 51. By regulation 3(4) of SI 2025/688 it replaces regulation 51 entirely and inserts four new regulations. Each does separate work:
New regulation 51 restates the universal rules: the user may terminate the framework contract at any time (subject to a one-month notice cap); any termination charge must reasonably correspond to actual cost; no charge after 6 months; pre-paid charges are refunded proportionally. These provisions apply to all framework contracts irrespective of when they were entered into.
New regulation 51A restates the legacy notice rule: framework contracts concluded for an indefinite period and entered into before 28 April 2026 may be terminated on at least two months’ notice if the contract so provides. The legacy regime continues on its own track for existing book.
New regulation 51B carries the new regime for framework contracts entered into on or after 28 April 2026. Three obligations operate together. First, the PSP must provide a notice of termination at least 90 days before termination takes effect. Second, the notice must contain an explanation of the reasons sufficiently detailed and specific so the customer can understand why the contract is being terminated. A generic statement that the relationship is no longer commercial is not enough. Third, the notice must advise the customer how to complain to the PSP and of any right to complain to the Financial Ombudsman Service. Where there is a conflict between regulation 51B and another legal requirement, the other prevails to the extent of the conflict. Regulation 51B applies only to framework contracts concluded for an indefinite period. Fixed-term framework contracts (rare in retail consumer payments, found occasionally in merchant services or business-to-business arrangements) sit outside the new notice regime; they run to their stated term unless renewed on an indefinite basis.
New regulation 51C sets out five carve-outs from the notice requirement in regulation 51B(1). Where one of them applies, the PSP may terminate without giving the regulation 51B notice. New regulation 51D is separate: it disapplies only the 90-day minimum (regulation 51B(3)) and requires notice without delay following the PSP’s decision, in defined cases of customer-side criminal conduct or false onboarding information. The SI also inserts a new definition of “serious crime” into regulation 2(1) of the PSRs 2017 by reference to Schedule 1 of the Serious Crime Act 2007. The architecture matters: the post-28 April book runs under regs 51B, 51C and 51D; the pre-28 April book runs under reg 51A.
Framework contract termination carve-outs: the five grounds in regulation 51C
| Reg 51C ground | Source instrument | When it applies |
|---|---|---|
| (a) Customer due diligence impossible | Regulation 27 MLRs 2017 | The PSP is required to apply CDD measures under MLRs reg 27 and is unable to apply them as required by MLRs reg 28. |
| (b) Frozen account under Immigration Act | Section 40G Immigration Act 2014 | A payment account provided under the framework contract must be closed under the immigration sanctions regime for disqualified persons. |
| (c) Serious crime suspicion | Reg 51C(c) PSRs 2017; reg 2(1) “serious crime” definition referring to Schedule 1 Serious Crime Act 2007 | The PSP has reasonable grounds to suspect the payment service has been used, is being used or will be used in connection with a serious crime. |
| (d) Regulator-required termination | Reg 51C(d) PSRs 2017 | The FCA, HM Treasury or the Secretary of State require the framework contract to be terminated in the exercise of their powers. |
| (e) Third-party offence | Reg 51C(e) PSRs 2017 | The PSP reasonably believes the user has engaged in conduct, while providing goods or services to a third party, that involves or is likely to involve the commission of an offence AND the payment service has been used in connection with that conduct. |
The MLRs reg 27 carve-out is operationally the most demanding. Where the PSP cannot complete or refresh CDD on a customer, the regulation 51B(1) notice obligation does not apply and the PSP may terminate immediately. The justification still needs documenting internally: the test is objective and the FCA will look for the evidential trail in supervision. The carve-out is not a default route for difficult customers; it is reserved for cases where CDD is genuinely undeliverable. The new (e) third-party offence carve-out is the broadest in scope: it covers conduct outside the customer’s direct dealings with the PSP, but its hook is the use of the payment service in connection with the conduct.
The fast-track regime under regulation 51D
Regulation 51D operates separately from the 51C carve-outs. It disapplies the 90-day minimum in regulation 51B(3) but keeps the requirement to provide a regulation 51B notice. The PSP must give the termination notice without delay following its decision to terminate. Two conditions trigger 51D.
First, where the PSP considers the user’s conduct in relation to a person acting for or on behalf of the PSP amounts to the commission of an offence under the harassment, intimidation and abusive-behaviour provisions specified in the regulation. These cover sections 4, 4A and 5 of the Public Order Act 1986, Article 9 of the Public Order (Northern Ireland) Order 1987, the Protection from Harassment Act 1997, the Protection from Harassment (Northern Ireland) Order 1997 and section 38 of the Criminal Justice and Licensing (Scotland) Act 2010. Customer-side abuse of frontline staff is the operative scenario.
Second, where the user provided incorrect information prior to or when entering into the framework contract, and had the correct information been provided the PSP would not have entered into the contract. This is a misrepresentation-at-onboarding ground.
Under 51D the PSP cannot terminate without ever serving a notice: it still has to serve the regulation 51B notice (with the sufficiently-detailed reasons and FOS signposting). The 90-day clock just does not run. As with regulation 51B, where a conflict arises with another legal requirement, the other prevails.
Parallel changes to basic bank accounts under the PARs 2015
SI 2025/688 also amends the Payment Accounts Regulations 2015 (the PARs 2015), which govern basic bank accounts. The amendments mirror the PSRs 2017 reforms on the basic-bank-account leg. Regulation 25 of the PARs 2015 (refusal of application for a basic bank account) is amended to require sufficiently-detailed and specific reasons for refusal, with complaint signposting to the credit institution and the Financial Ombudsman Service. Regulation 26 of the PARs 2015 (termination of basic bank account framework contracts) is amended to introduce the 90-day notice rule for accounts opened on or after 28 April 2026, the same sufficiently-detailed reasons requirement, and the FOS signposting duty. The pre-28 April 2026 book continues at two months’ notice.
For designated credit institutions providing basic bank accounts the operational shape is therefore the same as for PSPs: parallel old-book and new-book regimes, identical reasons and signposting standards, identical commencement date. The PARs 2015 leg is not separately addressed by the FCA Approach Document.
What the FCA Approach Document adds at paragraph 8.98
The amended regulations are law from 28 April 2026. The FCA Approach Document is non-binding guidance, but it sits between the rule text and supervision: it sets out how the FCA reads the rules and what the FCA expects to see when it engages a PSP on a contested termination. The May 2026 version of the Approach Document (the FCA’s key publications page labels it as such, with the version 8 reference inside the PDF’s own change log) sets out the FCA’s first operational reading at paragraph 8.98 of chapter 8.
The Approach Document text sits alongside the safeguarding changes covered in our companion post on the May 2026 version. The pairing matters: the FCA has consolidated two simultaneous regulatory tightenings on UK payments firms (the contract termination architecture from 28 April 2026 and the supplementary safeguarding regime from 7 May 2026) into one supervisory text. The FCA’s signal is that both should be operated under a single compliance lens.
What the framework contract termination architecture means for compliance teams
The new duties land on customer-facing relationship and complaints teams more than on treasury. Four operational changes follow. First, account-closure workflows need a contract-date branch: legacy contracts entered into before 28 April 2026 run on regulation 51A’s two-month notice; new contracts run on regulations 51B, 51C and 51D. Second, termination notices for the new book must carry a specific and detailed reasons block. PSPs that used generic closure letters will need to rebuild the templates. Third, the notice must signpost the customer’s right to complain to the PSP and to the Financial Ombudsman Service. Fourth, internal decision protocols need to capture which regulation governs each termination: a reg 51C carve-out (no notice required), a reg 51D fast-track (notice without delay) or the default reg 51B 90-day track.
The reasons obligation is the largest practical challenge. The reasons must be sufficiently detailed and specific. They cannot collapse to “commercial decision” or “no longer in our risk appetite”. They must engage with the customer’s specific situation in a form the customer can understand. PSPs operating at scale will need to standardise reason categories without losing the specificity the rule requires. The FCA will read templated letters against that standard.
The carve-outs and the fast-track regime are operational risks in the opposite direction. A PSP that over-relies on the MLRs reg 27 carve-out, the reg 51C(e) third-party offence ground or the reg 51D fast-track may face supervisory challenge if the evidential record is thin. The “reasonable grounds” and “reasonably believes” tests are evidential. The supplementary regime sits inside the broader UK payments modernisation work and the FCA work programme 2026 push on payments firm conduct.
Viewpoint
The new architecture is calibrated to the public debate on de-banking through 2023 and 2024. The drafting choice to substitute reg 51 with five regulations rather than patch the existing one tells the reader the policy ambition: a process regime with clear branches, not a slogan. PSPs retain their commercial discretion to decide which customers to serve. The cost is procedural: longer notice, more specific reasons, sharper documentation, an evidential record on each non-default ground.
In our experience advising payments firms on account-closure programmes, the area that catches most firms is the reasons block. A reasons template that reads as evasive or formulaic fails the new test, and paragraph 8.98 will be the supervisory reference point. The new reg 51C(e) third-party offence ground will be the next operational learning point as firms work out how widely it sits in their case mix.
Frequently asked questions
When does the new framework contract termination architecture apply?
The new regulations 51, 51A, 51B, 51C and 51D of the PSRs 2017 took effect on 28 April 2026. The 90-day notice and reasons obligations in regulation 51B apply to framework contracts entered into on or after that date. Contracts entered into before 28 April 2026 continue under regulation 51A: two months’ notice and the prior reasons framework.
Does the new regime apply to e-money institutions?
Yes, in respect of the payment services they provide. EMIs typically hold concurrent authorisations under the PSRs 2017 and the EMRs 2011. Regulations 51 to 51D of the PSRs 2017 apply to the framework contract underpinning the payment services. The EMRs 2011 do not contain a parallel termination rule; the analysis follows the PSRs 2017.
Can a PSP still close an account without notice?
Yes, in the five regulation 51C carve-out cases: CDD impossibility under MLRs reg 27; an Immigration Act 2014 section 40G frozen-account closure; reasonable grounds to suspect serious crime use; FCA, HM Treasury or Secretary of State-required termination; or reasonable belief that the customer’s conduct in providing goods or services to a third party involves an offence in connection with which the payment service has been used. The regulation 51D fast-track grounds (Public Order Act and harassment offences against PSP staff, or false information at onboarding) do not allow termination without any notice: the notice still has to issue, just without the 90-day minimum.
What level of detail is required in the reasons?
The reasons must be sufficiently detailed and specific so the customer can understand why the contract is being terminated. A generic statement that the relationship is no longer commercial is insufficient. The FCA Approach Document at paragraph 8.98 sets the supervisory expectation. PSPs operating at scale should standardise reason categories without collapsing into generic language.
Do the same rules apply to basic bank accounts?
Yes, in parallel. SI 2025/688 also amends regulations 25 and 26 of the Payment Accounts Regulations 2015 to require sufficiently-detailed reasons, FOS signposting and 90-day notice on termination of basic bank account framework contracts entered into on or after 28 April 2026. Designated credit institutions providing basic bank accounts run the same dual-regime model as PSPs.
If you are mapping framework contract termination workflows to the new regulations 51 to 51D of the PSRs 2017, the parallel PARs 2015 amendments, or the FCA Approach Document at paragraph 8.98, contact Rob Bratby at Bratby Law. Our payments product, safeguarding and scheme governance page sets out our work for PIs and EMIs on conduct rules and the FCA’s supervisory expectations.
