Consumers will be better protected when they use payment firms,
with the introduction of new rules to protect their money from
May 2026.
These changes will improve safeguarding practices among payment
firms.
Safeguarding means that customer money must be kept separate from
the firm's own money so that it is available to be returned if
the firm fails.
Following constructive engagement with industry,
the FCA has confirmed that
the new rules will kick in after 9 months, giving industry time
to prepare. It has also made changes to ensure that rules are
proportionate for smaller firms, such as by removing the
requirement for audits if a firm holds less than £100,000 in
customer funds.
These rules mean that consumers are better protected, and if a
payment or e-money firm fails they are more likely to get a full
refund and with fewer delays.
The new rules require:
- Annual audits by qualified auditors.
- Monthly reporting for payment firms.
- Firms to conduct daily checks to make sure the right amount
of money is being safeguarded to protect customers.
- Better planning if firms fail so customers receive their
money back sooner.
These rules will address issues the regulator has found in
previous failures of payment firms.
Payment firms that became insolvent between Q1 2018 and Q2 2023
had average shortfalls of 65% of their customers' funds.
Matthew Long, director of payments and digital assets, FCA, said:
"People rely on payment firms to help manage their financial
lives. But too often, when those firms fail, their customers are
left out of pocket.
"Most of those who responded to our consultation agreed we need
to raise standards to protect people's money and build trust, but
any changes needed to be proportionate, especially for smaller
firms.
"We'll be watching closely to see if firms seize the opportunity
and make effective improvements that their customers rightly
deserve – this will help us to determine whether any further
tightening of rules is necessary."
Notes to editors
-
PS25/12: Changes to the
safeguarding regime for payments and e-money firms.
-
Intended amendments to Payment
Services and Electronic Money - Our Approach, May 2026 draft
version.
- The FCA will be actively supporting industry through the
implementation period to help them make changes, with webinars,
events and our day-to-day supervisory work.
- Funds held by payment and e-money firms are not directly
protected by the Financial Services Compensation Scheme (FSCS).
Instead, firms must safeguard funds which can mean customers lose
money or experience delays to funds being returned if the firm
fails.
- The rules will come into effect on 7 May 2026.
