Safeguarding: Is your firm compliant?

With the Financial Conduct Authority (FCA) paying more and more attention to firms safeguarding arrangements to ensure customer funds are sufficiently protected, many firms are approaching Neopay for guidance and support in reviewing their safeguarding systems and controls to ensure they adhere to the regulatory requirements.

Safeguarding customer funds is a key consumer protection measure within the Electronic Money Regulations 2011 (EMRs) and Payment Services Regulations 2017 (PSRs). Although firms have safeguarding measures in place, many do not meet the standards required by the FCA’s new more assertive regime.

Essential Actions for Compliance

Firms should monitor and review their safeguarding measures regularly as a part of compliance monitoring oversight, ensuring that the appropriate management information is collected and reviewed at regular intervals

It is also crucial that firms invest in training the relevant individuals responsible for dealing with customer funds, as well as appointing a dedicated individual with overall responsibility for the firm’s safeguarding measures.

Common Oversights and Areas for Improvement

Common oversights include not reviewing activities frequently enough to ensure all relevant funds are safeguarded, not having adequate processes to prevent any co-mingling of customer and firms own funds and not appropriately accounting for foreign exchange risks and other risk factors.

Another frequent oversight is that many firms have not adequately ensured that documentation includes adequate rationale to explain how their operational procedures ensure compliance.

The FCA expects firms to have the appropriate measures, rationale and reviews in place to ensure compliance.  It expects firms to be able to evidence these reviews along with remedial actions as appropriate.

Questions Firms Should Ask

How Neopay can help

Neopay offers a range of cost-effective services to assist e-money and payment firms in ensuring their safeguarding measures remain compliant.  We can help with audits, workshops and training, as well as regular advice and review through our Virtual Compliance Service.