FCA publishes changes to the safeguarding regime for payments and e-money firms

The FCA published a policy statement (PS25/12) setting out changes to the safeguarding regime for payments and e-money firms. The FCA consulted on the proposals in CP24/20 in September 2024. The changes to the rules are in the Payment and Electronic Money (Safeguarding) Instrument 2025 (FCA 2025/38) which will come into force on 7 May 2026, allowing for an implementation period of nine months (an extension to the originally proposed six months). In addition, the FCA also published the proposed related amendments to its payment services and e-money approach document.

In PS25/12, the FCA uses the terms "Supplementary Regime" and "Post-Repeal Regime" to describe the two-stage approach to the changes (referred to as Interim Rules and End-State Rules in its consultation). PS25/12 sets out the FCA's final rules and guidance for the Supplementary Regime. Taking into account the feedback from its consultation, the FCA has made the rules more proportionate and improved some implementation points. The changes include:

• Amending the rules so that reconciliations are not required on weekends and bank holidays.
• Introducing a threshold of £100,000 for relevant funds under which payments firms will not be required to arrange a safeguarding audit.
• Removing the requirement for a limited assurance audit for payments firms holding no relevant funds.

The FCA also sets out the feedback it received on its Post-Repeal Regime, including concerns about the impact of imposing a statutory trust and receiving relevant funds directly into a designated safeguarding bank account. The FCA is not proposing to implement the proposals regarding the Post-Repeal Regime without further consideration. After the Supplementary Regime has come into force, the FCA will then review its implementation and consult on further proposals if necessary.

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