Vixio, a regulatory intelligence solutions provider, has released its 2025 Safeguarding Outlook, examining upcoming global rules and their impact on how payments firms must protect consumer funds.
As part of the new research, Vixio warns that without proper safeguarding measures, consumers could be at risk of losing millions of pounds. A lack of proper safeguarding can do serious damage – the Wirecard scandal in 2020 revealed what happens when customers’ money is not protected, with the company misappropriating around €1.9billion in supposedly ‘safe’ funds.
Since then, regulators have made meaningful progress on safeguarding. Key markets, including the UK, the EU and Canada, are currently updating their safeguarding regulations, with Vixio aiming to provide firms operating in those jurisdictions with the information they need to update and hone their processes and practices.
In the UK, the Financial Conduct Authority (FCA) has announced plans to reform safeguarding requirements for payment and e-money institutions, aiming to strengthen consumer protection and market integrity. FCA data shows that £23billion was held in UK safeguarding accounts in 2023, so Vixio says ensuring those funds are securely held is a significant issue.
“The UK’s plan to overhaul its payments and e-money safeguarding framework is a direct response to failings in the existing regime and aims to create legal certainty and ensure client funds are properly protected,” explained John Gidla, head of global regulatory research and analysis at Vixio. “It will be interesting to see if the FCA can achieve its goals without overburdening firms with onerous reconciliation, reporting and fund segregation requirements.”
Staying up to date
Vixio explains that the European Union (EU) is also reviewing its safeguarding regime as part of the revisions to the Payment Services Directive (PSD2). Likely new requirements include mitigating concentration risk by ensuring safeguarded funds are not held entirely with one institution, ensuring that e-money funds are safeguarded by the end of the next business day and notifying regulators of any material changes to safeguarding measures.
In North America, Canada is updating its own safeguarding regulations, aiming to strengthen integrity and consumer confidence, and payments firms that are in possession of end-user funds will need to either place them in trust, in a prescribed account or in a segregated account backed by insurance or a guarantee. The Bank of Canada has set a deadline at 8 September 2025 for firms to comply with its new safeguarding rules.
In the research report, Vixio warns that firms must protect themselves against the threat of enforcement action by implementing proper systems and controls and ensuring they have diversified, vetted custodians.
