CP24/20: Changes to the safeguarding regime for payments and e-money firms

Read CP24/20 (PDF)[1]

Why we are consulting

We are consulting on rules and guidance for the interim and end state stages of the proposed safeguarding regime.

The interim rules will improve compliance with the existing safeguarding requirements set out in the EMRs (Electronic Money Regulations) and PSRs (Payment Services Regulations). The end state will replace the safeguarding requirements of the EMRs and PSRs with a ‘CASS’ style regime where relevant funds and assets are held on trust for consumers.

We want to address weaknesses in the current safeguarding approach and ensure that consumer money is safe by:

• minimising shortfalls in safeguarded relevant funds
• ensuring these funds are returned as cost-effectively and quickly as possible
• strengthening our ability to identify and intervene in firms that do not meet our safeguarding expectations to ensure these outcomes are met

Who this is for

Our proposed rules will apply to all:

• authorised payment institutions
• e-money institutions
• small e-money institutions
• credit unions who issue e-money in the United Kingdom under the PSRs and EMRs

Small payment institutions will continue to be able to opt-in to comply with safeguarding requirements on a voluntary basis. Small e-money institutions and credit unions (that are required to safeguard funds received in exchange for e-money) will also continue to be able to opt-in to the safeguarding requirements for any unrelated payment services.

Our proposed rules will also apply to EEA firms in supervised run-off under the financial services contracts regime. Our rules will not apply to firms subject to unsupervised ‘contract run off’.

Our proposals will also interest:  

• consumers of payments firms
• consumer groups
• insolvency practitioners (IPs)
• auditors
• professional advisers including lawyers and accountants
• providers of safeguarding accounts
• custodians of assets used for safeguarding purposes
• firms who provide insurance or guarantees to Payments Firms responsible for safeguarding relevant funds

Next steps

This consultation has now closed. 

We will publish feedback on responses and issue a Policy Statement once we have reviewed your comments.