With just six months until new UK payment safeguarding regulations take effect, more than three-quarters of financial firms remain in the early stages of preparation – or have yet to begin at all.
From 8th May 2026, payment and e-money institutions must comply with the
Financial Conduct Authority’s (FCA) updated safeguarding rules, marking a significant shift from guidance to enforceable regulation. The new regime demands stricter operational standards and direct regulatory oversight. Firms must keep customer funds separate at all times, complete daily reconciliations on working days (excluding weekends and bank holidays), maintain clear documentation, and undergo formal audits of their safeguarding arrangements, with audit reports submitted directly to the FCA.
A live poll of 68 payments industry professionals conducted at a safeguarding event hosted by
Clear Junction, the global cross-border payments provider, and
Howden, the global insurance broker, revealed the alarming preparation levels:
- Only 7% of financial firms say they are fully ready
- With fewer than 22% in the advanced stages of preparation
- The majority (78%) are either in early stages (59%) or have not started (19%)
The event at Howden’s London headquarters brought together senior figures from across the payments, legal, and compliance sectors to discuss how firms are preparing for the new regime. Speakers included Teresa Cameron, Group CEO of Clear Junction; Hugo Thorp, Head of Fintech at Howden; Alison Donnelly, Director at regulatory consultancy fscom; Sam Robinson, Partner at law firm CMS; and Riccardo Tordera-Ricchi, Head of Policy and Government Relations at The Payments Association.
Poll respondents identified key friction points for implementing the new rules:
- Next-day (D+1) reconciliations – ensuring client funds are matched and accounted for by the following business day – were identified as the biggest operational friction, cited by 58% of respondents
- Other challenges:
- Managing UK and EU changes without duplication (19%)
- Insurance policy wording that meets FCA requirements (13%)
- And the quality of monthly management information (10%)
Teresa Cameron, Group CEO of Clear Junction, commented: “Reconciliations are always at the top of the leaderboard, but they are only one part of the challenge. Firms also face the short supply of safeguarding banks, the issue of liquidity, and the requirement to keep resolution packs as living, breathing documents.
“The practical way forward is to diversify approaches: using a hybrid method of segregation where possible and insurance where banks are scarce, ensuring liquidity across 24/7 payment schemes, automating reconciliations to meet next‑day requirements, and keeping resolution packs updated so they can be relied upon in an insolvency.”
Alison Donnelly, Director at fscom, said: “The poll results chime with what we also hear from firms. 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.
“The FCA has always said safeguarding is extremely important, but this May deadline is one you will be tested on; your homework will be marked. Every authorised payment institution and e-money institution will have its safeguarding arrangements tested by a qualified auditor. Stakeholders need to be prepared for that reality.”
Hugo Thorp, Head of Fintech at Howden, said: “Safeguarding needs to be right; there can’t be any gaps that leave customers unprotected. We’ve added an intent‑to‑renew clause to give firms certainty that there will be no cliff‑edge scenarios. Insurance can sit alongside segregation, adding a layer of coverage and helping firms diversify their approach while maintaining liquidity.”
Sam Robinson, Partner at CMS, added: “Before it was guidance, and now it’s rules. That makes expectations stricter and more specific, including for insurance policy wording: funds should be paid promptly into safeguarding accounts with no impediments beyond proof of insolvency, with clear clauses on timing, non-cancellation and notice.”
With less than six months until the FCA’s deadline, firms must now translate safeguarding rules into workable routines that withstand audit and protect customer funds.
Next steps before May 2026:
- Automate reconciliations to meet D+1 requirements across weekends and time zones
- Maintain liquidity across 24/7 payment schemes
- Keep resolution packs live and up to date for use in insolvency
- Prepare for audits by mapping controls against FCA rules and arranging qualified safeguarding audits
- Review insurance policies to confirm clauses on timing, non‑cancellation, notice, and prompt payout on insolvency
Clear Junction and Howden will continue to work with partners across payments and insurance to help firms move from regulatory interpretation to operational readiness ahead of the May deadline.
