UK Payment Firms Lag in Readiness for New Safeguarding Regulations
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Most UK payment and e-money institutions are behind schedule in preparing for updated Financial Conduct Authority (FCA) safeguarding rules set to take effect on May 8, 2026, according to new poll findings. The regulations will solidify existing guidance into binding rules, demanding stricter protection of customer funds.
A recent survey conducted at a London industry event hosted by Clear Junction and Howden revealed a concerning lack of preparedness. Only 7% of firms reported being fully ready to comply with the new standards. Fewer than 22% are in the advanced stages of preparation, leaving a ample 78% either in the early stages or having not yet begun the process.
FCA Rules Demand Enhanced Financial Protection
the updated FCA rules mandate that institutions maintain a clear separation between customer funds and their own, conduct daily reconciliations on all working days, maintain complete documentation, and submit to formal safeguarding audits directly to the FCA. These measures aim to bolster consumer confidence and financial stability within the rapidly evolving payments landscape.
Reconciliation Challenges Top Concerns
Attendees at the london event, comprised of senior leaders in payments, legal, and compliance, identified next-day reconciliations as the most important operational hurdle. A majority – 58% of respondents – cited the challenge of ensuring client funds are accurately matched and accounted for by the following business day as a major friction point.
Beyond daily reconciliations, firms are grappling with several other complexities. These include navigating the interplay between UK and European Union (EU) regulatory changes without creating redundant processes, securing insurance policies that meet the FCA’s stringent expectations, and improving the overall quality of monthly management reporting.
“reconciliations are always at the top of the leaderboard, but thay are only one part of the challenge,” a senior official stated. “Firms also face the short supply of safeguarding banks, the issue of liquidity, and the requirement to keep resolution packs as living, breathing documents.”
Interpretation and Implementation remain Key Obstacles
The poll results reflect broader industry concerns. According to a director at fscom, “many are still at the early stages; some are starting to safeguard from scratch and asking when obligations start and end. More mature firms are figuring through D+1 calculations and reconciliations, and seeking interpretation advice on what constitutes a material breach and what ‘without undue delay’ really means.”
Industry experts emphasized the urgent need for firms to translate the regulatory requirements into practical,auditable routines. Recommended steps include automation, proactively preparing for safeguarding audits, and thoroughly reviewing insurance clauses to guarantee prompt payouts in the event of insolvency.
Clear junction and Howden have pledged continued support to firms as they transition from interpreting the new regulations to achieving full operational readiness before the May 2026 deadline.
Why, Who, What, and How did it end?
Why: The FCA is updating safeguarding rules to solidify existing guidance into binding rules, aiming to increase protection of customer funds and bolster consumer confidence in the rapidly evolving payments landscape.
Who: The primary actors are UK payment and e-money institutions, the financial Conduct Authority (FCA), Clear Junction, Howden, and fscom. The survey included senior leaders in payments, legal, and compliance.
What: A recent poll revealed that the vast
