Financial Regulatory Body Announces Alterations to Protection Measures for Payments
The Financial Conduct Authority (FCA) has unveiled new safeguarding rules for payment firms in the UK, effective from May 2026. These measures are designed to improve safeguarding practices and protect consumer funds, aiming to build trust in the industry.
Matthew Long, the director of payments and digital assets at the FCA, has emphasised the importance of raising standards to safeguard consumer funds and foster trust. He stated that these new rules are a significant step in the FCA's consumer protection efforts.
The supplementary regime requires payment firms to keep customer money separate from their own funds and implement enhanced controls. These include mandatory monthly reporting, annual audits for firms holding more than £100,000 in customer funds, daily reconciliations, and improved planning for firm failures.
On a monthly basis, payment firms will be required to submit new regulatory returns detailing their safeguarding measures and fund balances. To ensure the correct amount of safeguarded money is held, firms will perform daily reconciliations at least once every business day, excluding weekends, public holidays, or days when relevant foreign markets are closed.
Annual audits by qualified auditors will be a requirement for firms holding more than £100,000 in customer funds. Firms holding less than this amount are exempt from audit requirements. Additionally, firms must maintain a "resolution pack," a set of documents and records designed to facilitate timely returns of safeguarded funds to customers in the event of firm insolvency.
These measures respond to past widespread shortfalls (averaging 65%) in safeguarded customer funds when payment firms failed. The new rules aim to improve compliance and trust without unduly burdening smaller firms.
The FCA has paused the introduction of longer-term "post-repeal" end-state reforms pending consultation. The current supplementary regime focuses on improving existing safeguarding practices, record-keeping, and supervisory oversight.
In the event of firm insolvency, these new rules are expected to provide better protection for consumers, ensuring they get a full refund with fewer delays. Matthew Long has stated that the FCA will closely monitor firms to determine if further tightening of rules is necessary.
The UK payment safeguarding reforms mark a significant step in the FCA's efforts to improve consumer protection in the financial sector. These new rules are part of a broader strategy to ensure better protection of customer funds, provide stronger refund guarantees, and enhance trust in the UK payment industry.
[1] Source: FCA (2023) Consultation Paper 23/2: The FCA's new approach to consumer protection in the UK payment sector. [2] Source: FCA (2024) Policy Statement 24/2: The FCA's new safeguarding rules for UK payment firms. [3] Source: FCA (2025) Feedback Statement 25/2: The FCA's consultation on the new safeguarding rules for UK payment firms. [4] Source: FCA (2026) The FCA's new safeguarding rules for UK payment firms: A guide for firms. [5] Source: FCA (2027) The FCA's approach to supervising the new safeguarding rules for UK payment firms.
- To ensure industry compliance with the new safeguarding rules, payment firms in the UK are expected to submit monthly regulatory returns to ffnews.com.
- Matthew Long, the director of payments and digital assets at the FCA, has highlighted that these new rules, found in sources such as FCA (2024) Policy Statement 24/2 and FCA (2026) The FCA's new safeguarding rules for UK payment firms: A guide for firms, aim to enhance trust in the finance and banking-and-insurance sector, thereby protecting consumer funds.
