Reconciliations
Reconciliations are required at least once each reconciliation day.
Reconciliation days exclude weekends, bank holidays and days on which relevant foreign markets are closed. This should not prevent payments firms from performing a reconciliation on other days if it is appropriate due to the nature, volume and complexity of their business.
Reconciliations are intended to check the accuracy of a firm’s books and records, rather than being used as the means to maintain books and records. Therefore, separate to the reconciliation requirements, payments firms are required to maintain records and accounts to enable them, at any time and without delay, to distinguish between relevant funds and other funds.
Comparison of Relevant Funds
The relevant funds deposit resource and requirement reconciliation has been replaced with a higher-level comparison of the relevant funds.
The ‘D+1 segregation requirement’ is the amount that should be held in relevant funds bank accounts, or as relevant assets in relevant assets accounts.
The ‘D+1 segregation resource’ is the balances of those accounts.
If the D+1 segregation resource is lower than the D+1 segregation requirement, a payments firm must remedy the shortfall either using relevant funds or its own funds (i.e. if the amount safeguarded cannot be lower than the amount required).
E-Money and Unrelated Payment Services
External Reconciliations
External reconciliations are only required to be carried out on reconciliation days.
Where possible, the records and accounts used for the external and internal safeguarding reconciliation should relate to the same point in time.
Where they cannot be aligned, policies and procedures should cover how the firm will ensure the external safeguarding reconciliations will achieve their purpose.
The requirement to make and retain records of the decision on the frequency of external safeguarding reconciliations has been removed.
The FCA has not provided additional guidance on different types of data sources for reconciliations. It will be for payments firms to decide which data sources are appropriate for their circumstances on a case-by-case basis.
Non-standard safeguarding reconciliation
Payments firms can use a non-standard method of internal safeguarding reconciliation where:
- It follows certain steps set out in the rules.
- The firm has documented how it will meet its safeguarding obligations to its clients
- An independent auditor has confirmed in a written report that the proposed method meets the firm’s obligations (in addition to the annual audit)
- A payments firm using a non-standard method must not change its method unless it has established and documented its reasons for concluding the changed method will meet its obligations to clients and an auditor has prepared a report in respect of the proposed changes.
Firms will not be allowed to deviate from requirements on frequency.
Notification of Breaches
Next Steps
The changes will come into force on 7 May 2026. Before then, firms need to familiarise themselves with the new rules and guidance and establish systems and controls to meet the new requirements.
The full document can be found at https://www.fca.org.uk/publication/policy/ps25-12.pdf
We will also be posting additional information for firms, including further details on the Resolution Pack, Audits and Reconciliations as well as feedback from our consultants over the coming weeks.
How Neopay can help
At Neopay, we understand that adapting to regulatory change can be complex — particularly when it comes to critical processes like safeguarding reconciliations. Our team of experts can help you assess the impact of the new requirements on your business, implement effective reconciliation procedures, and ensure your systems and controls meet regulatory expectations. We provide tailored, practical support to help you manage both standard and non-standard reconciliation methods, prepare for annual audits, and document your approach effectively. Whether you need help with reconciliation processes and controls, internal recordkeeping or reporting, Neopay is here to guide you, so you can move forward with clarity and confidence.
Contact our team to find out how we can support your business.
