The FCA has confirmed its reform of the safeguarding rules for payment firms. The new rules will take effect from 7 May 2026 (giving firms 9 months lead in) in the form of what the FCA now describes as a “Supplementary Regime” (which in consultation it called the “interim rules”) and will introduce a new Chapter 15 in CASS. It has not made any substantive changes from the version it consulted on.
The key changes:
- will require firms to perform safeguarding reconciliations at least once every business day;
- require firms to keep a resolution pack, which will need to include all records and documents that would help get funds back to customers quickly in the event of the firm’s insolvency;
- introduce an annual external safeguarding audit requirement for most APIs and EMIs;
- introduce a new monthly regulatory return;
- set requirements on firms to carry out due diligence when appointing and reviewing their appointment of third parties that manage or hold relevant assets or funds;
- oblige firms using safeguarding insurance to ensure there are no restrictions on the policy or arrangement paying out other than certification that an insolvency event has occurred; and
- require firms to have a contingency plan at least 3 months before a safeguarding insurance policy or comparable guarantee expires.
The FCA received significant feedback on the end-state regime, which it now calls the “Post-Repeal Regime” and it is now proposing to review these proposals and consult again on how the final regime should look after a full audit cycle has been completed.