Safeguarding

In financial services, safeguarding refers to the regulatory requirement for payment and e-money institutions to protect customer funds by keeping them separate from the company’s own money.

The goal is to ensure that, if the firm becomes insolvent, customer funds can be repaid in full. Safeguarding is overseen by the Financial Conduct Authority (FCA) in the UK and applies to firms authorised under the Payment Services Regulations (PSRs) and Electronic Money Regulations (EMRs).

Funds must be either:

Held in segregated client accounts with an approved bank, or

Covered by insurance or a comparable guarantee.

Example:

A UK payment provider that processes client money holds all customer balances in a designated safeguarding account at a major bank, ensuring those funds are ring-fenced from the company’s operational cash.

Used in:

Payment institutions, e-money issuers, fintechs, and compliance with UK regulatory frameworks to protect customer funds.