Risk & Rules
What is safeguarding? The FCA’s 2026 rules, explained
Safeguarding is the FCA requirement that e-money institutions and payment institutions keep customer funds separate from their own money — held in designated safeguarding accounts or liquid safe assets — so customer funds can be returned even if the firm fails. It is the e-money world’s answer to deposit protection.
What changed on 7 May 2026
The FCA’s new safeguarding regime (policy statement PS25/12, rules in CASS 15 with supervision under SUP 3A) came into force on 7 May 2026. It replaces the old guidance-led approach with hard rules: daily internal reconciliations of safeguarded funds, a monthly regulatory return, and an annual safeguarding audit by a qualified auditor — the first audits falling due within six months of the regime going live.
This is the “supplementary” stage of the FCA’s reform. The proposed end-state — holding safeguarded funds under a statutory trust — has been paused pending further FCA review, so the supplementary regime is the law that applies today. Any safeguarding explanation written before 2026 is describing the old world.
Who is covered — and who can opt in
Authorised EMIs and authorised payment institutions must comply. Small payment institutions (SPIs) are not required to safeguard but may opt in — worth asking about, because it changes what happens to your money in a failure.
In this group’s own stack: e-money and payment accounts sit with an authorised EMI (safeguarding mandatory), payments run through an authorised PI (safeguarding mandatory), and the SPI’s position is exactly the kind of detail we believe should be explained to you plainly rather than discovered later.
What it means for your business
Practically: your funds at a compliant EMI are reconciled daily, reported monthly, audited annually, and held ring-fenced from the firm’s own money. If the firm failed, an administrator’s job is to return safeguarded funds to customers — ahead of the firm’s general creditors.
The questions worth asking any provider, post-May 2026: where are safeguarded funds held, when was your last safeguarding audit, and can I see the firm’s FCA register entry? Compliant firms answer these happily.
Put it to work
Frequently asked questions
Is safeguarding the same as FSCS protection?
No. FSCS insures eligible bank deposits up to £85,000 after a failure. Safeguarding ring-fences e-money funds continuously so they exist to be returned in full — different mechanism, different trade-offs.
What is CASS 15?
The FCA rulebook chapter holding the new safeguarding rules for payments and e-money firms, in force since 7 May 2026 — daily reconciliations, monthly returns and annual audits, supervised under SUP 3A.
Prefer a straight answer about your own case?
Tell us your sector and what you’re trying to set up — a specialist responds, typically within one business day.