Safeguarding under PS25/12 for payments and e-money firms

‘Interim rules’ (the Supplementary Regime) commence from 7 May 2026 - supporting the existing legislative safeguarding provisions of EMRs and PSRs until ‘End-state rules’ comes into play.

‘End-state rules’ (the Post-Repeal Regime) with no definitive date set as yet - replace the safeguarding requirements of the EMRs and PSRs with a ‘CASS’ style regime. The FCA plans to consider these further and consult again in 2027/28.

Safeguarding is part of Consumer Duty of the firm.

Under the Consumer Understanding outcome of the Duty, firms must support their customers’ understanding by ensuring that the firm’s communications equip the customers to make decisions that are effective, timely and properly informed.

For example, the firm should highlight where appropriate that they are not banks, and that funds which they hold are protected by safeguarding arrangements rather than by the FSCS.

Unless opted-in under voluntary basis, the safeguarding rules will not apply to Small Payment Institutions (SPIs).

Requirements under these ‘Interim rules’ from 7 May 2026 are:

To perform safeguarding reconciliations at least once each day, other than weekends, public holidays and days when relevant foreign markets are not open.

To maintain a resolution pack, including requirements for the types of documents and records to be included that would help achieve a timely return of relevant funds to customers should the payments firm enter an insolvency procedure.

To arrange annual audits of their safeguarding compliance, carried out by a qualified auditor if the firm safeguarded over £100,000 of relevant funds at any point in the previous 53 weeks.

To submit a new monthly regulatory return to the FCA relating to the safeguarding arrangements.

Contact us and we will be happy to assist: * Review and update of the existing safeguarding policies and procedures; * Update and validation of the reconciliation processes; * Review of the existing bank acknowledgement letters in line with prescriptive new rules; * Consolidate and improve processes to produce monthly safeguarding returns; * Review and improve the resolution pack to ensure that it is fit-for-urpose; and * other related matters under PS25/12.