Safeguarding – Organisational Arrangements & Control 💡

The PSRs 2017 and EMRs impose safeguarding requirements to protect customers where funds are held by an institution. They do this by ensuring that those funds are either placed in a separate account from the institution’s working capital and other funds, or are covered by an appropriate insurance policy or comparable guarantee.

On the insolvency of an institution, claims of e-money holders or payment service users are paid from the asset pool formed from these funds in priority to all other creditors (other than in respect of the costs of distributing the asset pool).

The requirement of safeguarding applies to ‘relevant funds’ in both the PSRs 2017 and EMRs. Similar in outcomes and objectives to the CASS regime, underpinned by associated rules and obligations – the protection and consumer outcomes expected are clear – these rules require firms to ensure they have adequate organisational arrangements and standards, including high levels of governance and conduct in place to ensure good customer outcomes and protection is delivered.

The expectation on firms captured under the regime remains understandably high and the ability to mitigate risks by ensuring a strong control environment, accountability and clear governance and management of firm’s performance against their compliance obligations are key elements to evidence compliance.

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