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Britain’s Financial Conduct Authority (FCA) said on Thursday it will introduce tougher rules for electronic payment and e-money firms starting May 2026 to improving customer fund protection and strengthening sector stability.
The reforms, first proposed in September 2023, will require firms to segregate customer funds from their own accounts, ensuring that money can be returned to users if a company collapses.
The FCA said the changes follow a fivefold increase in the use of online payment and e-money accounts between 2017 and 2022, often at the expense of traditional bank accounts. The shift has placed millions of consumers at greater risk, particularly in cases where firms fail to safeguard client funds adequately.
“People rely on payment firms to help manage their financial lives. But too often, when those firms fail, their customers are left out of pocket,” said Matthew Long, director of payments and digital assets at the FCA. “We’ll be watching closely to see if firms make the necessary improvements.”
What the Rules Will Require
Under the new framework larger payment and e-money firms must submit monthly safeguarding reports and undergo annual audits. Additionally, daily checks must be conducted to ensure accurate safeguarding of customer funds. The rules apply to payment institutions, e-money institutions (EMIs), and credit unions that issue e-money.
The FCA’s data revealed that failed payment firms between 2018 and mid-2023 showed average shortfalls of 65% in safeguarded customer funds.
The announcement comes shortly after Argentex, a London-based foreign exchange broker and EMI since 2018, entered special administration in July following a liquidity crisis and market volatility.
The industry welcomed the new framework but urged the FCA to consider proportionality.
UK Finance, a major financial lobby group, said it supports stronger safeguarding standards but stressed the need for balance.
“Getting the balance right means having rules that are practical, proportionate, and internationally competitive,” a spokesperson said. “It’s important the impact of the changes is assessed before any further tightening of the rules.”
The FCA said it will monitor implementation and assess whether further regulatory intervention is needed.
