Good house keeping by FCA7 May 2026 17:10
Safeguarding requirements for payment institutions and electronic (e-money) institutions
First published: 28/07/2015 Last updated: 07/05/2026 See all updates
This page provides guidance for payment and e‑money institutions on safeguarding customer funds in relation to payment transactions and the issuance of e‑money.
On this page
The Payment Services Regulations 2017 (PSRs) and Electronic Money Regulations 2011 (EMRs) require firms to take steps to protect customer funds in the event of insolvency. This is known as ‘safeguarding’.
Payment and e-money institutions that are required to safeguard relevant funds must follow the requirements set out in regulation 23 of the PSRs and/or regulation 20 of the EMRs, as well as rules set out in Chapter 10A and Chapter 15 of the Client Assets Sourcebook (CASS), and in Chapters 3A and Chapter 16 of the Supervision Manual (SUP) as applicable.
Credit unions that issue e-money are also required to safeguard relevant funds and so the same rules and regulations would apply.
Authorised Payment Institutions (APIs), Authorised E-Money Institutions (AEMIs) and Small E-Money Institutions (SEMIs)
For APIs, AEMIs and SEMIs, safeguarding is a mandatory requirement and a condition of authorisation or registration (as applicable).
Under the PSRs and EMRs, these institutions can safeguard relevant funds either by segregating them from all other funds they hold, or by arranging for the relevant funds to be covered by an insurance policy with an authorised insurer or a comparable guarantee. AEMIs which provide payment services that are unrelated to the issuance of e-money are also subject to the safeguarding provisions of the PSRs.
To ensure relevant funds are kept safe and to reduce the risk of financial loss if a firm fails, APIs, AEMIs and SEMIs are required to have a robust risk management framework in place that can:
Identify risks
Assess risks
Mitigate (reduce) risks
Safeguarding requirements for Small Payment Institutions (SPIs) and SEMIs under the PSRs
SPIs, and SEMIs which provide payment services that are unrelated to the issuance of e-money, can choose to comply with safeguarding requirements in the PSRs.
Where an SPI or SEMI chooses to safeguard relevant funds, it will need to apply the same level of protection that is expected of APIs under the PSRs.
SPIs and SEMIs should tell us whether they have chosen to safeguard:
when they apply for registration, and
in their annual reporting returns.
If an SPI or SEMI decides to begin safeguarding relevant funds after it has been registered, or if it decides to stop safeguarding, it should let us know via submission of a SUP 15 notification form. Alternatively, the SPI or SEMI can call our firm Contact Centre.
Monthly reporting on safeguarding and relevant funds
Under SUP 16, all APIs, AEMIs, and SEMIs and SPIs which choose to safeguard, are required to submit monthly reporting on their safeguarding arrangements and relevant
Sign In
Follow the stocks
