Insights

FCA Wants to Tighten Grip on Regulated Firms to Better Shield Customer Cash

Pat Crawley Pat Crawley Send an email
0 47 18 minutes read
fca-wants-to-tighten-grip-on-regulated-firms-to-better-shield-customer-cash

Wednesday, 25/09/2024 | 09:46 GMT by Damian Chmiel

  • The UK’s regulator has proposed new rules to strengthen safeguarding practices in payments and e-money services.
  • It plans to replace the current regime with a CASS-style framework, with final interim rules expected in early 2025.

FCA

The UK’s Financial Conduct Authority (FCA) has unveiled plans to strengthen safeguarding regulations for payments and e-money firms. It aims to better protect customers in the event of business failures.

FCA Proposes Stricter Safeguarding Rules for Payments Firms

The proposed rules come amid growing concerns over “poor safeguarding practices” in the rapidly expanding payments sector. According to the FCA’s Financial Lives Survey, the use of current accounts with e-money institutions has increased five-fold between 2017 and 2022.

Matthew Long, Director of Payments and Digital Assets at FCA

“We’re consulting on proposals to make safeguarding rules stronger and clearer for payment and e-money firms,” commented Matthew Long, Director of Payments and Digital Assets at FCA, “so customers get as much of their money back as quickly as possible if the firm goes out of business.”

The regulator plans to replace the existing e-money safeguarding regime with a client assets (CASS) style framework, tailored to the business models of payments firms. This move follows the FCA’s March 2023 letter to payments and e-money CEOs, which highlighted concerns about safeguarding and wind-down arrangements.

Since issuing that letter, the FCA has opened supervisory cases for approximately 15% of firms that safeguard customer funds, underscoring the urgency of the proposed reforms.

Unlike traditional bank accounts, funds held by payments and e-money firms are not directly protected by the Financial Services Compensation Scheme (FSCS). Instead, these firms are required to safeguard funds. That system has proven inadequate in some cases, leading to customer losses or delays in fund recovery when firms fail.

The FCA’s consultation, open until December 17, 2024, outlines both interim and long-term changes to the safeguarding regime. The interim rules aim to improve compliance with existing requirements. The end-state proposals envision a trust-based system for holding relevant funds and assets.

— Financial Conduct Authority (@TheFCA) September 24, 2024

FCA’s Latest Regulatory Actions in The UK

In addition to the latest proposals for changes in payment market regulations, the FCA, together with the UK government, is also working to reform capital markets. This initiative includes a significant change from the existing EU-based consumer cost disclosure regulations. It aims to establish a new system better suited for the UK market.

The proposed shift involves replacing the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation with a new framework known as Consumer Composite Investments (CCIs).

The CCI framework is designed to provide clearer insights into the costs and benefits of investment products. The government and the FCA are actively seeking input from the investment trust industry concerning the current cost disclosure regulations, which could significantly impact these entities.

Additionally, the FCA reported on its regulatory enforcement actions taken between April and June 2024. It highlighted its efforts against firms that violated financial promotion rules and engaged in unregulated activities. During this period, the FCA corrected or withdrew 3,273 promotions by authorized firms and issued 528 alerts about unauthorized entities. 11% of these alerts concerned clone scams that mimic legitimate businesses to deceive investors.

The UK’s Financial Conduct Authority (FCA) has unveiled plans to strengthen safeguarding regulations for payments and e-money firms. It aims to better protect customers in the event of business failures.

FCA Proposes Stricter Safeguarding Rules for Payments Firms

The proposed rules come amid growing concerns over “poor safeguarding practices” in the rapidly expanding payments sector. According to the FCA’s Financial Lives Survey, the use of current accounts with e-money institutions has increased five-fold between 2017 and 2022.

Matthew Long, Director of Payments and Digital Assets at FCA

“We’re consulting on proposals to make safeguarding rules stronger and clearer for payment and e-money firms,” commented Matthew Long, Director of Payments and Digital Assets at FCA, “so customers get as much of their money back as quickly as possible if the firm goes out of business.”

The regulator plans to replace the existing e-money safeguarding regime with a client assets (CASS) style framework, tailored to the business models of payments firms. This move follows the FCA’s March 2023 letter to payments and e-money CEOs, which highlighted concerns about safeguarding and wind-down arrangements.

Since issuing that letter, the FCA has opened supervisory cases for approximately 15% of firms that safeguard customer funds, underscoring the urgency of the proposed reforms.

Unlike traditional bank accounts, funds held by payments and e-money firms are not directly protected by the Financial Services Compensation Scheme (FSCS). Instead, these firms are required to safeguard funds. That system has proven inadequate in some cases, leading to customer losses or delays in fund recovery when firms fail.

The FCA’s consultation, open until December 17, 2024, outlines both interim and long-term changes to the safeguarding regime. The interim rules aim to improve compliance with existing requirements. The end-state proposals envision a trust-based system for holding relevant funds and assets.

— Financial Conduct Authority (@TheFCA) September 24, 2024

FCA’s Latest Regulatory Actions in The UK

In addition to the latest proposals for changes in payment market regulations, the FCA, together with the UK government, is also working to reform capital markets. This initiative includes a significant change from the existing EU-based consumer cost disclosure regulations. It aims to establish a new system better suited for the UK market.

The proposed shift involves replacing the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation with a new framework known as Consumer Composite Investments (CCIs).

The CCI framework is designed to provide clearer insights into the costs and benefits of investment products. The government and the FCA are actively seeking input from the investment trust industry concerning the current cost disclosure regulations, which could significantly impact these entities.

Additionally, the FCA reported on its regulatory enforcement actions taken between April and June 2024. It highlighted its efforts against firms that violated financial promotion rules and engaged in unregulated activities. During this period, the FCA corrected or withdrew 3,273 promotions by authorized firms and issued 528 alerts about unauthorized entities. 11% of these alerts concerned clone scams that mimic legitimate businesses to deceive investors.

Damian Chmiel

  • 1809 Articles
  • 41 Followers

Damian’s adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.

  • 1809 Articles
  • 41 Followers

Finance Magnates Daily Update

Get all the top financial news delivered straight to your inbox. Stay informed, stay ahead.

Keep Reading

More from the Author

FinTech

Featured Videos

The Role of PAMM, MAM & Copy Trading in Business Growth Strategies | Webinar

The Role of PAMM, MAM & Copy Trading in Business Growth Strategies | Webinar

The Role of PAMM, MAM & Copy Trading in Business Growth Strategies | Webinar

The Role of PAMM, MAM & Copy Trading in Business Growth Strategies | Webinar

The copy trading market is projected to double in size, growing from $2.2 billion to $4 billion by the end of this decade. In light of this, brokers and financial institutions are increasingly adopting PAMM, MAM, and Copy Trading solutions to scale operations and drive profitability. In this insightful webinar, Sergey Ryzhavin, Product Owner at B2COPY, outlines the advanced features of the B2COPY platform, showcasing how it enhances Copy Trading, PAMM, and MAM performance. Sergey also explores strategies for using these tools to attract new clients, improve customer engagement, and create additional revenue streams. 📣 Stay updated with the latest in finance and trading! Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today: 🔗 LinkedIn: https://www.linkedin.com/company/financemagnates/ 👍 Facebook: https://www.facebook.com/financemagnates/ 📸 Instagram: https://www.instagram.com/financemagnates_official 🐦 X (Twitter): https://twitter.com/financemagnates/ 📡 RSS Feed: https://www.financemagnates.com/feed/ ▶️ Telegram: https://t.me/financemagnatesnews Don’t miss out on our latest videos, interviews, and event coverage. 🔔 Subscribe to our YouTube channel for more!🔔

The copy trading market is projected to double in size, growing from $2.2 billion to $4 billion by the end of this decade. In light of this, brokers and financial institutions are increasingly adopting PAMM, MAM, and Copy Trading solutions to scale operations and drive profitability. In this insightful webinar, Sergey Ryzhavin, Product Owner at B2COPY, outlines the advanced features of the B2COPY platform, showcasing how it enhances Copy Trading, PAMM, and MAM performance. Sergey also explores strategies for using these tools to attract new clients, improve customer engagement, and create additional revenue streams. 📣 Stay updated with the latest in finance and trading! Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today: 🔗 LinkedIn: https://www.linkedin.com/company/financemagnates/ 👍 Facebook: https://www.facebook.com/financemagnates/ 📸 Instagram: https://www.instagram.com/financemagnates_official 🐦 X (Twitter): https://twitter.com/financemagnates/ 📡 RSS Feed: https://www.financemagnates.com/feed/ ▶️ Telegram: https://t.me/financemagnatesnews Don’t miss out on our latest videos, interviews, and event coverage. 🔔 Subscribe to our YouTube channel for more!🔔

The copy trading market is projected to double in size, growing from $2.2 billion to $4 billion by the end of this decade. In light of this, brokers and financial institutions are increasingly adopting PAMM, MAM, and Copy Trading solutions to scale operations and drive profitability. In this insightful webinar, Sergey Ryzhavin, Product Owner at B2COPY, outlines the advanced features of the B2COPY platform, showcasing how it enhances Copy Trading, PAMM, and MAM performance. Sergey also explores strategies for using these tools to attract new clients, improve customer engagement, and create additional revenue streams. 📣 Stay updated with the latest in finance and trading! Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today: 🔗 LinkedIn: https://www.linkedin.com/company/financemagnates/ 👍 Facebook: https://www.facebook.com/financemagnates/ 📸 Instagram: https://www.instagram.com/financemagnates_official 🐦 X (Twitter): https://twitter.com/financemagnates/ 📡 RSS Feed: https://www.financemagnates.com/feed/ ▶️ Telegram: https://t.me/financemagnatesnews Don’t miss out on our latest videos, interviews, and event coverage. 🔔 Subscribe to our YouTube channel for more!🔔

The copy trading market is projected to double in size, growing from $2.2 billion to $4 billion by the end of this decade. In light of this, brokers and financial institutions are increasingly adopting PAMM, MAM, and Copy Trading solutions to scale operations and drive profitability. In this insightful webinar, Sergey Ryzhavin, Product Owner at B2COPY, outlines the advanced features of the B2COPY platform, showcasing how it enhances Copy Trading, PAMM, and MAM performance. Sergey also explores strategies for using these tools to attract new clients, improve customer engagement, and create additional revenue streams. 📣 Stay updated with the latest in finance and trading! Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today: 🔗 LinkedIn: https://www.linkedin.com/company/financemagnates/ 👍 Facebook: https://www.facebook.com/financemagnates/ 📸 Instagram: https://www.instagram.com/financemagnates_official 🐦 X (Twitter): https://twitter.com/financemagnates/ 📡 RSS Feed: https://www.financemagnates.com/feed/ ▶️ Telegram: https://t.me/financemagnatesnews Don’t miss out on our latest videos, interviews, and event coverage. 🔔 Subscribe to our YouTube channel for more!🔔

More Videos

  • Join us at FMLS:24 to connect with global institutional brokers. Secure your spot today! #fmls24

    Join us at FMLS:24 to connect with global institutional brokers. Secure your spot today! #fmls24

    Join us at FMLS:24 to connect with global institutional brokers. Secure your spot today! #fmls24

    Join us at FMLS:24 to connect with global institutional brokers. Secure your spot today! #fmls24

    Join us at FMLS:24 to connect with global institutional brokers. Secure your spot today! #fmls24

    Join us at FMLS:24 to connect with global institutional brokers. Secure your spot today! #fmls24

  • 🌟 Explore cutting-edge solutions and connect with fintech leaders at FMLS:24!

    🌟 Explore cutting-edge solutions and connect with fintech leaders at FMLS:24!

    🌟 Explore cutting-edge solutions and connect with fintech leaders at FMLS:24!

    🌟 Explore cutting-edge solutions and connect with fintech leaders at FMLS:24!

    🌟 Explore cutting-edge solutions and connect with fintech leaders at FMLS:24!

    🌟 Explore cutting-edge solutions and connect with fintech leaders at FMLS:24!

  • 🤝 Meet industry leaders at the premier event for brokers – FMLS:24. Secure your spot today!

    🤝 Meet industry leaders at the premier event for brokers – FMLS:24. Secure your spot today!

    🤝 Meet industry leaders at the premier event for brokers – FMLS:24. Secure your spot today!

    🤝 Meet industry leaders at the premier event for brokers – FMLS:24. Secure your spot today!

    🤝 Meet industry leaders at the premier event for brokers – FMLS:24. Secure your spot today!

    🤝 Meet industry leaders at the premier event for brokers – FMLS:24. Secure your spot today!

  • Finance Magnates Pacific Summit 2024 | FMPS:24 Highlights

    Finance Magnates Pacific Summit 2024 | FMPS:24 Highlights

    Finance Magnates Pacific Summit 2024 | FMPS:24 Highlights

    Finance Magnates Pacific Summit 2024 | FMPS:24 Highlights

    Finance Magnates Pacific Summit 2024 | FMPS:24 Highlights

    Finance Magnates Pacific Summit 2024 | FMPS:24 Highlights

    Relive the best moments from the Finance Magnates Pacific Summit 2024 with our highlights video! ✨ From action-packed moments, insightful speaker sessions, the exclusive Opening Blitz, and immersive workshops, this video captures the energy and excitement of FMPS:24. Whether you attended or missed out, here’s your chance to experience the top moments that made FMPS:24 unforgettable. 🎬 Watch, share, and join the conversation! Don’t forget to use the hashtags #fmps #fmps24 #FMevents when sharing. Stay tuned for more events. See you next time! 📣 Stay updated with the latest in finance and trading! Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today: 🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/ 👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents 📸 Instagram: https://www.instagram.com/fmevents_official 🐦 Twitter: https://twitter.com/F_M_events 🎥 TikTok: https://www.tiktok.com/@fmevents_official ▶️ YouTube: https://www.youtube.com/@FinanceMagnates_official Don’t miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!

    Relive the best moments from the Finance Magnates Pacific Summit 2024 with our highlights video! ✨ From action-packed moments, insightful speaker sessions, the exclusive Opening Blitz, and immersive workshops, this video captures the energy and excitement of FMPS:24. Whether you attended or missed out, here’s your chance to experience the top moments that made FMPS:24 unforgettable. 🎬 Watch, share, and join the conversation! Don’t forget to use the hashtags #fmps #fmps24 #FMevents when sharing. Stay tuned for more events. See you next time! 📣 Stay updated with the latest in finance and trading! Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today: 🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/ 👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents 📸 Instagram: https://www.instagram.com/fmevents_official 🐦 Twitter: https://twitter.com/F_M_events 🎥 TikTok: https://www.tiktok.com/@fmevents_official ▶️ YouTube: https://www.youtube.com/@FinanceMagnates_official Don’t miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!

    Relive the best moments from the Finance Magnates Pacific Summit 2024 with our highlights video! ✨ From action-packed moments, insightful speaker sessions, the exclusive Opening Blitz, and immersive workshops, this video captures the energy and excitement of FMPS:24. Whether you attended or missed out, here’s your chance to experience the top moments that made FMPS:24 unforgettable. 🎬 Watch, share, and join the conversation! Don’t forget to use the hashtags #fmps #fmps24 #FMevents when sharing. Stay tuned for more events. See you next time! 📣 Stay updated with the latest in finance and trading! Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today: 🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/ 👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents 📸 Instagram: https://www.instagram.com/fmevents_official 🐦 Twitter: https://twitter.com/F_M_events 🎥 TikTok: https://www.tiktok.com/@fmevents_official ▶️ YouTube: https://www.youtube.com/@FinanceMagnates_official Don’t miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!

    Relive the best moments from the Finance Magnates Pacific Summit 2024 with our highlights video! ✨ From action-packed moments, insightful speaker sessions, the exclusive Opening Blitz, and immersive workshops, this video captures the energy and excitement of FMPS:24. Whether you attended or missed out, here’s your chance to experience the top moments that made FMPS:24 unforgettable. 🎬 Watch, share, and join the conversation! Don’t forget to use the hashtags #fmps #fmps24 #FMevents when sharing. Stay tuned for more events. See you next time! 📣 Stay updated with the latest in finance and trading! Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today: 🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/ 👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents 📸 Instagram: https://www.instagram.com/fmevents_official 🐦 Twitter: https://twitter.com/F_M_events 🎥 TikTok: https://www.tiktok.com/@fmevents_official ▶️ YouTube: https://www.youtube.com/@FinanceMagnates_official Don’t miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!

    Relive the best moments from the Finance Magnates Pacific Summit 2024 with our highlights video! ✨ From action-packed moments, insightful speaker sessions, the exclusive Opening Blitz, and immersive workshops, this video captures the energy and excitement of FMPS:24. Whether you attended or missed out, here’s your chance to experience the top moments that made FMPS:24 unforgettable. 🎬 Watch, share, and join the conversation! Don’t forget to use the hashtags #fmps #fmps24 #FMevents when sharing. Stay tuned for more events. See you next time! 📣 Stay updated with the latest in finance and trading! Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today: 🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/ 👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents 📸 Instagram: https://www.instagram.com/fmevents_official 🐦 Twitter: https://twitter.com/F_M_events 🎥 TikTok: https://www.tiktok.com/@fmevents_official ▶️ YouTube: https://www.youtube.com/@FinanceMagnates_official Don’t miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!

    Relive the best moments from the Finance Magnates Pacific Summit 2024 with our highlights video! ✨ From action-packed moments, insightful speaker sessions, the exclusive Opening Blitz, and immersive workshops, this video captures the energy and excitement of FMPS:24. Whether you attended or missed out, here’s your chance to experience the top moments that made FMPS:24 unforgettable. 🎬 Watch, share, and join the conversation! Don’t forget to use the hashtags #fmps #fmps24 #FMevents when sharing. Stay tuned for more events. See you next time! 📣 Stay updated with the latest in finance and trading! Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today: 🔗 LinkedIn: https://www.linkedin.com/showcase/financemagnates-events/ 👍 Facebook: https://www.facebook.com/FinanceMagnatesEvents 📸 Instagram: https://www.instagram.com/fmevents_official 🐦 Twitter: https://twitter.com/F_M_events 🎥 TikTok: https://www.tiktok.com/@fmevents_official ▶️ YouTube: https://www.youtube.com/@FinanceMagnates_official Don’t miss out on our latest videos, interviews, and event coverage. Subscribe to our YouTube channel for more!

Tags
Pat Crawley Pat Crawley Send an email
0 47 18 minutes read
Pat Crawley

Pat Crawley

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button