FCA Dear CEO letter – requirements to safeguard customer funds

FCA Dear CEO letter – Non-bank PSPs – requirements to safeguard customer funds

Background

• Non-bank payment service providers – requirements for safeguarding of customer funds
• Published by the FCA on 4 July 2019
• Safeguarding customer funds is a key consumer protection measure within the Electronic Money Regulations 2011 (EMRs) and Payment Services Regulations 2017 (PSRs). It is vital that all firms have appropriate and well managed safeguarding arrangements to ensure that, if a firm becomes insolvent, customers funds are returned in full in a timely and orderly way.
• There is a high potential for harm to consumers if a failing firm has not safeguarded customer funds adequately, as authorised payment institutions (APIs) and e-money institutions (EMIs) are not covered by the Financial Services Compensation Scheme (FSCS).

Impacts

Over the past 6 months the FCA has reviewed how well firms meet the safeguarding requirements in practice and whether e-money holders/payment service users may suffer financial loss or other harm if a firm fails.

This letter outlines the FCA’s findings.

The FCA requires firms to review their safeguarding arrangements to ensure they meet the requirements. Having done so, please either send to the FCA the attestation at the end of this Dear CEO letter or notify the FCA immediately if your firm is non-compliant in any material respect.

The FCA gives more details at the end of this letter.

Timeline with relevant dates to be logged on regulatory calendar

• Published on 4 July 2019

Next steps

The FCA requires firms to review their safeguarding arrangements to ensure they meet the requirements.

Having done so, please either send to the FCA the attestation at the end of this Dear CEO letter or notify the FCA immediately if your firm is non-compliant in any material respect.