The Financial Conduct Authority published final rules on Thursday tightening the safeguarding regime for electronic money institutions and authorised payment firms, introducing a statutory trust requirement that will fundamentally change how customer funds are protected in the event of firm insolvency. Under the new rules, which take effect on 1 June 2026, e-money firms must hold relevant funds in a trust arrangement that ensures they are ring-fenced from the firm's estate and returned to customers ahead of other creditors in an insolvency. The FCA said the change addresses a longstanding weakness in the existing regime exposed by the collapse of several smaller payments firms.

The rules also impose daily reconciliation requirements, replacing the current end-of-business-day standard with a near-real-time obligation for firms processing more than £100 million in customer funds annually. Firms must appoint an independent safeguarding auditor and submit quarterly compliance reports to the FCA. FCA director of payments and digital assets Matthew Long said the reforms would "bring the UK's safeguarding regime into line with the standards that consumers rightly expect when they entrust their money to a regulated firm." He noted that the FCA had received 287 responses to its 2025 consultation, with the majority supporting stricter safeguarding requirements.

The reforms have been broadly welcomed by consumer groups and larger fintech firms, though smaller e-money institutions have raised concerns about compliance costs. The Electronic Money Association estimated that implementing the statutory trust structure would cost between £50,000 and £250,000 per firm, with annual ongoing costs of £30,000 to £80,000. PayUK chief executive David Sheridan said the new rules would "raise the bar across the industry and help restore confidence in the payments sector following a number of high-profile failures." The FCA confirmed it would offer a six-month transitional period for firms that can demonstrate they are making good progress towards compliance.