Stay compliant with the latest FCA safeguarding rules – are you ready?

The Financial Conduct Authority (FCA) has published its final Policy Statement PS25/12 (CASS 15), which sets out new, strengthened requirements for safeguarding client funds by payment services firms and e-money institutions. These rules, effective from 7 May 2026, replace the previous consultation proposals (CP24/20) and introduce significant changes to how firms must protect customer money.

What’s changed?

Key updates under PS25/12 include:

• Mandatory annual safeguarding audits
  All payment services firms and e-money institutions must arrange an annual safeguarding audit, unless they have safeguarded less than £100,000 at any time in the previous 53 weeks. Audits must be performed by a qualified auditor.
• Daily reconciliations
  Firms must perform daily internal and external reconciliations on “reconciliation days” (business days, excluding weekends, UK bank holidays and relevant foreign market closures).
• Resolution packs
  Firms must maintain a comprehensive resolution pack, containing all key documents and records needed to support a timely return of client funds in the event of insolvency.
• Monthly safeguarding returns
  A new monthly regulatory return must be submitted to the FCA, providing detailed information on safeguarding arrangements. This replaces previous ad hoc reporting and applies to all firms, regardless of size.
• Enhanced due diligence and contingency planning
  Firms must exercise due skill, care and diligence when appointing or reviewing third parties (such as banks, custodians or insurers) for safeguarding. Insurance or guarantee arrangements must be reviewed at least three months before expiry, with contingency plans in place.
• Audit exemption for smaller firms
  Firms safeguarding less than £100,000 at any time in the previous 53 weeks are exempt from the annual audit requirement, reducing the compliance burden for smaller businesses.
• Transitional arrangements
  Firms have a nine-month implementation period (to May 2026) to comply with the new rules. Existing third-party arrangements and acknowledgement letters can continue during this period, subject to review.

What does this mean for you?

• Greater regulatory scrutiny
  The FCA will be monitoring firms more closely, with regular audits and monthly reporting.
• Audit readiness
  Firms must ensure their safeguarding arrangements, reconciliations and documentation are robust and up to date.
• Operational impact
  Enhanced record-keeping, due diligence and contingency planning are now essential. Smaller firms may benefit from the audit exemption but all must comply with the new standards.
• Client confidence
  These changes are designed to ensure that client funds are protected and can be returned quickly and in full if a firm fails.

How we can help

Our safeguarding audit specialists are fully up to date with the latest FCA requirements. We can help you complete a gap analysis between your current systems, processes and controls against CASS 15, and perform the annual safeguarding audit under CASS 15.

Focus areas are:

• Governance and oversight arrangements
• Reconciliation processes
• Reporting systems
• Audit arrangements
• Advice on due diligence and contingency planning for third-party arrangements.

Contact us today to discuss how we can support your compliance with CASS 15 and help you navigate the new safeguarding regime.