As the payments industry looked ahead to new safeguarding rules from the FCA, firms across the UK found themselves at a pivotal moment of change, but also one of real opportunity.
In this webinar, our panel of experts explored what the next era of safeguarding could mean for payment institutions and e-money firms. The discussion reflected on key lessons learned from previous legislation, considered how best practice is evolving, and examined how firms can proactively prepare to turn regulatory change into a competitive advantage.
The session offered an optimistic and practical view of what is possible when preparation and smart implementation come together, highlighting how stronger safeguarding can help build trust, resilience and innovation across the UK payments ecosystem.
Key discussion topics included:
• The state of the industry and how past regulation is shaping future safeguarding standards
• What the emerging safeguarding landscape could look like
• How payment firms can stay ahead as best practice continues to evolve in a new regulatory environment
• The future of payments within a more robust, forward-thinking compliance culture
Questions which weren’t answered in the webinar:
Question 1: The revised Approach Document appears to clarify that PIs need to safeguard funds even if the value has been sent to FX liquidity provider for currency conversion. Grateful for further clarity on expectation.
Answer:
Safeguarding applies to funds received for payment execution (including FX)
The relevant funds include sums received for the execution of a payment transaction, and these must be safeguarded to ensure customers can be repaid if the firm fails. This obligation is based on the purpose of the funds, not simply where they are temporarily held.
Explicit clarification on FX transactions
In PS25/12: Changes to the safeguarding regime for payments and e-money firms, Chapter 5 (“When safeguarding starts and ends”), the FCA directly addresses funds received to purchase foreign currency:
1. FX independent of payment services: where a foreign exchange transaction is carried out independently of any payment service, the funds do not need to be safeguarded.
2. FX linked to a payment: where FX is linked to a payment, the funds fall within the payment flow and therefore remain relevant funds. As a result, the safeguarding obligation continues even if value is passed to another party (e.g., an FX liquidity provider) during the conversion process.
Sending funds to third parties does not end safeguarding
1. Safeguarding begins as soon as the institution has an entitlement to the funds; and
2. Firms must have organisational arrangements to ensure they do not use relevant funds that should be safeguarded to settle payments prematurely. This means that passing funds to a third party (including FX liquidity providers) does not, in itself, end the safeguarding obligation.
Funds remain counted in safeguarding reconciliations until the payment is completed
Under the safeguarding rules (CASS 15), firms must:
1. Include all relevant funds received for the client in their individual safeguarding balances; and
2. Only deduct payments once funds have been paid to the payee or the payee’s PSP.
Question 2 When will the FCA share the reg data structure for the monthly returns and test submission on the portal?
Answer:
Ahead of the rules coming into force, firms will be able to view the return on their future reporting schedule and download it as a PDF to familiarise themselves with the new requirements. We are targeting to have this become available on their RegData schedule from 31 January 2026. The safeguarding return shown in RegData will be the form firms must complete when the first return is due, and then monthly thereafter.
The first monthly return will be due within 15 business days of the end of June 2026. This means the deadline will be 15 July 2026 for firms that are open for business seven days per week (for the execution of payment transactions), or 21 July 2026 for firms that are only open for business five days per week.
