The UK Financial Conduct Authority (FCA) has outlined measures to better protect customers when payments and e-money firms go out of business.
Use of payments firms has grown in recent years, but the FCA says it continues to see poor safeguarding practices from firms.
Funds held by payments and e-money firms are not directly protected by the Financial Services Compensation Scheme (FSCS). Instead, firms must safeguard funds which can mean customers lose money or experience delays to funds being returned if the firm fails.
The FCA wrote to payments and e-money CEOs in March 2023 about their safeguarding and wind-down arrangements and has since opened supervisory cases relating to approximately 15% of firms that safeguard, to address its concerns.
Matthew Long, Director of…
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