The Financial Conduct Authority (FCA) is proposing changes to the safeguarding regime that applies to payments and e-money firms, in order to better protect customers.

Funds held by payments firms are not covered by the Financial Services Compensation Scheme, so customers can lose money or have to wait for their money to be returned if a firm fails. Firms are required to safeguard customers’ funds, and the FCA wants to address weaknesses in the current approach to safeguarding so that shortfalls in safeguarded funds are minimised and funds are returned as quickly as possible if a firm fails.

The FCA also intends to strengthen its ability to identify and intervene in firms that do not meet its safeguarding expectations.

The FCA is currently consulting on the proposals, which include replacing the existing safeguarding regime with a client assets-style regime where relevant funds are held on trust for customers. It intends to publish strengthened interim safeguarding rules during the first six months of 2025.


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