On 7 August 2025, the Financial Conduct Authority (FCA) officially published its long-awaited policy statement, PS25/12, which sets out changes to the safeguarding regime for payments and e-money firms.

Background

In 2024, the FCA consulted on the safeguarding regime for payments firms and proposed new rules and guidance to improve the regime, ultimately to improve the safety of customer funds held by these firms. The proposed changes were to be introduced in two stages:

• ‘Interim rules’ (now the 'Supplementary Regime', which includes the introduction of CASS 15 and associated rules and guidance) - to encourage greater compliance with existing safeguarding requirements, support more consistent record keeping, and strengthen reporting and monitoring requirements.

• ‘End-state rules’ (now the 'Post-Repeal Regime') - to completely replace the safeguarding requirements of the E-Money Regulations (EMRs) and the Payment Services Regulations (PSRs) with the CASS regime.

On 7 August 2025 the FCA released its policy statement PS25/12, which summarises the feedback on its consultation as well as its approach to the Post-Repeal regime. It also sets out final rules and guidance to be included in the FCA Handbook.

Stage 1 - Supplementary Regime

The Supplementary Regime has an implementation period of nine months, with the new Supplementary Regime rules, guidance and related amendments to the Approach Document (see draft Approach Document here) coming into force on 7 May 2026.

The key changes introduced in the Supplementary Regime can be split into three areas:

Improved books and records

Payments firms will be required to:

• Perform safeguarding reconciliations at least once each day, other than weekends

• public holidays and days when relevant foreign markets are not open.

• Maintain a resolution pack (CASS 10A) detailing where funds are held, a list of the firm’s agents and distributors, and the firm’s procedures for the management, recording and transfer of relevant funds and assets.

Enhanced monitoring and reporting

Payments firms will be required to:

• Arrange annual audits of their safeguarding compliance, carried out by a qualified auditor (article to follow).

• Submit a monthly regulatory return to the FCA relating to their safeguarding arrangements.

Strengthening elements of safeguarding

Payments firms will be required to:

• Carry out due diligence when appointing or periodically reviewing third parties that manage or hold relevant funds or assets.

• Make sure that there are no conditions or restrictions on safeguarding insurance policies and comparable guarantees paying out, other than certification of the occurrence of an insolvency event.

Have a contingency plan in place (if relevant funds were safeguarded via insurance or guarantee) at least 3 months before the safeguarding insurance policy or comparable guarantee expires.

Stage 2 - Post-Repeal Regime

Once a full audit period has been completed following the introduction of the Supplementary Regime, the FCA will review the implementation of CASS 15 and associated rules and guidance, and consult on further proposals if changes are deemed necessary.

Next steps

Before the Supplementary Regime (and related amendments to the Approach document) comes into force on 7 May 2026, firms should familiarise themselves with the new rules and guidance and perform a gap analysis between their current systems, processes and controls against CASS 15 (and the associated rules and guidance). Key elements that this gap analysis should cover are:

• Governance and oversight arrangements

• Reconciliation processes

• Reporting systems

• Audit arrangements

• Resolution pack preparation