The Financial Conduct Authority (FCA) has confirmed new rules to strengthen safeguarding practices among payment and e-money firms, aiming to better protect customer funds if a firm fails.
From 7 May 2026, the rules will require firms to:
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Conduct daily checks to ensure the correct amount of customer funds are safeguarded.
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Submit monthly reports to the FCA.
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Undergo annual audits by qualified auditors — with an exemption for firms holding under £100,000 in customer funds.
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Improve wind-down planning so customer money is returned more quickly if a firm becomes insolvent.
The measures follow concerns that in insolvencies between Q1 2018 and Q2 2023, affected payment firms had average shortfalls of 65% of customer funds.
The FCA has given industry nine months to prepare and adjusted requirements for smaller firms to ensure proportionality.
Matthew Long, FCA director of payments and digital assets, said:
“People rely on payment firms to help manage their financial lives. But too often, when those firms fail, their customers are left out of pocket.
We’ll be watching closely to see if firms seize the opportunity and make effective improvements that their customers rightly deserve.”
Support and implementation
The FCA will actively support the sector throughout the implementation period with webinars, events, and day-to-day supervisory work to help firms prepare.
Customer protection
Funds held by payment and e-money firms are not directly protected by the Financial Services Compensation Scheme (FSCS). Instead, firms must safeguard customer money, which can still mean losses or delays in repayments if the firm fails. The new rules are designed to reduce both risks.
Further information
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PS25/12: Changes to the safeguarding regime for payments and e-money firms
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Intended amendments to Payment Services and Electronic Money – Our Approach (May 2026 draft version)
The rules will come into effect on 7 May 2026.
