🔐 Big Changes Ahead: FCA Finalises Tougher Safeguarding Rules for Payments and E-Money Firms

The FCA has just published Policy Statement PS25/12 – and it’s a pivotal moment for the payments and e-money sector.

After years of warnings and firm failures, the regulator is taking decisive action to strengthen the safeguarding framework. The message is clear: firms must do more to protect customer funds – and must be ready to act if they fail.

The new rules, referred to by the FCA as the Supplementary Regime, come into force on 7 May 2026. This interim regime will apply until government legislation is introduced to fully align the UK safeguarding framework with the Financial Services and Markets Act 2000.

But expectations have already shifted. This isn’t just about compliance – it’s about resilience, credibility, and trust.

What’s Changing – A Step Up from Today’s Regime

PS25/12 introduces targeted changes to plug gaps in the current safeguarding rules. Key enhancements include:

• Clearer requirements for safeguarding relevant funds: Including the timing of when funds become relevant and how they must be protected throughout the payment or e-money lifecycle.

• Improved reconciliation and record-keeping obligations: Firms must maintain clear, timely, and accurate records to demonstrate compliance – even under stress or failure scenarios.

• Wind-down planning with a safeguarding lens: Firms will need to have documented and tested arrangements to ensure customers receive their money back quickly and in full if the firm fails.

• Stronger expectations around governance and oversight: Senior management will be expected to take ownership of safeguarding, with clear accountability for compliance and escalation.

• Enhanced guidance: The FCA has updated its Approach Document to reflect these changes – making expectations more explicit across a wider range of scenarios.

Who Is Affected?

These new rules apply to: 

• Authorised payment institutions

• Authorised and small e-money institutions

• Credit unions issuing e-money in the UK

Small payment institutions may choose to opt in, but are not subject to the rules unless they do.

What Firms Should Do Now

With less than a year to implement the new regime, this is a critical mobilisation window. Key priorities: 

1. Assess your safeguarding arrangements: Review fund flows, segregation methods, reconciliation processes, and third-party arrangements. Identify gaps and risks.

2. Review wind-down and insolvency readiness: Firms must be able to return safeguarded funds quickly and cleanly. Document your approach – and test it under stress.

3. Get governance and accountability in shape: The FCA expects safeguarding to be an executive-level issue. Boards need clear reporting and oversight structures in place.

4. Engage with the updated Approach Document: This is the regulator’s blueprint for how it will supervise safeguarding. Align your policies and controls accordingly.

 Programme Considerations – Plan for Execution, Not Just Design

 Preparing for May 2026 will take more than policy tweaks. Firms should now be asking:

• Who will set up, own, drive and sign-off the safeguarding implementation programme?

• How will you design, resource, and deliver the programme without disrupting BAU or customer outcomes?

• Do you have the right internal expertise – or will you need to bring in external specialists to support design and delivery?

• What is your approach to governance and sign-off – who owns final accountability?

• How will you successfully prepare for your first audit under the new framework?

Final Thought: The Bar Has Been Raised

This is the FCA drawing a line in the sand. The Supplementary Regime is not a stopgap – it’s a significant tightening of expectations, backed by stronger supervisory tools and reduced tolerance for non-compliance.

For forward-thinking firms, it’s a chance to build credibility, protect customers, and lead the market in standards of control and transparency.

Need support scoping your safeguarding response or designing your implementation programme? Let’s talk.