UK Introduces Revised Payment Safeguarding Rules

The Financial Conduct Authority (FCA), the UK’s financial regulator, has introduced new safeguarding rules to strengthen consumer protection when using payment firms.

Under the new rules, payments firms must undergo annual audits by qualified auditors, provide monthly reports, run daily checks to confirm customer money is protected, and put stronger plans in place to ensure faster repayments if the firm collapses.

The measures are intended to ensure customer money is kept separate from a firm’s own funds, so it can be returned to the customer if the firm fails.

Matthew Long, director of payments and digital assets at the 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.”

The move comes after the regulator found previous failures of payment firms. For example, payment firms that became insolvent between Q1 2018 and Q2 2023 had average shortfalls of 65% of their customers’ funds.

The FCA has confirmed that the new rules will take effect from May 2026 to ensure the industry has adequate time to prepare. It has also made changes to ensure that rules are proportionate for smaller firms. For example, those holding under £100,000 in customer funds will not need annual audits.