The Financial Conduct Authority has introduced stricter safeguarding rules for payment and e-money firms, effective from today, requiring daily reconciliation checks, monthly reporting, annual audits, and faster return of customer funds in insolvency scenarios.
The package tightens protections for funds held by payment service providers and electronic money institutions — a sector that has grown rapidly since the Payment Services Regulations were first introduced. The FCA published the changes alongside a broader supervisory push on operational resilience in consumer-facing financial services.
Deep Patel, Partner and UK Payments Lead at Capco, described the reforms as a welcome shift toward stronger consumer protection. In his view, the additional requirements should give customers greater confidence that their money is protected, particularly important given the pace of growth and product innovation the sector has seen in recent years.
Not every firm is starting from the same position. Established providers are likely already running controls that align closely with the new rules, but some will face material compliance and operational investment. Firms need to demonstrate not only that safeguarding controls exist, but that those controls are subject to effective oversight, testing, and clear internal accountability. That distinction — between having a policy and evidencing that the policy works — is where supervisory attention tends to concentrate.
Patel flagged that the reforms could also accelerate market consolidation. Smaller payment firms and newer entrants may find the cumulative compliance burden hard to absorb at a time when competition for customers and margin is already intense. Raising the baseline across the sector may, over time, reshape the competitive structure — with better-capitalised and better-governed firms pulling further ahead.
Capco is a global management and technology consultancy specialising in financial services digital transformation. It is a Wipro company.
