FCA has carried out a review of the safeguarding arrangements of 11 non-bank PSPs. It wanted to see how well they complied with the requirements of the EMRs and PSRs and found both good and bad practices. Among its key concerns were:
- some firms could not properly identify the services they were providing or the capacity in which they provided them, nor did they know when they were issuing e-money. This meant they could not know whether they were safeguarding the relevant funds;
- firms that did not have clearly documented processes for safeguarding and had not appointed any individual to be responsible for their oversight were less likely to be compliant than those that did;
- some firms segregated funds on receipt, but others received funds into accounts with funds held for other purposes. Where firms do this, they must remove them as frequently as possible throughout the day but very few did so more than once a day;
- some firms did not take proper measures to ensure funds held on their behalf by agents or distributors were segregated on receipt – and relevant funds were often combined with other funds overnight as a result;
- some firms had not properly designated their accounts;
- several firms did not carry out reconciliations often enough or adjust balances when they identified discrepancies; and
- some firms did not have in place adequate systems and controls to identify breaches, and their attitude meant they did not properly consider safeguarding when developing new products.
FCA has written to CEOs of all ELMIs and authorised PSPs, asking them to review the requirements, ensure they fully meet them, and attest to FCA that they do so by 31 July.