The UK’s Financial Conduct Authority (FCA) has announced new rules to strengthen consumer protection in the e-money and payments space. But consumer advocacy groups say the move is long overdue — and may not go far enough.
What’s Changing
The FCA’s updated regulatory framework imposes stricter conditions on how e-money firms manage and safeguard customer funds. Key measures include:
- Separation of funds – Customer funds must be held independently of the firm’s own assets
- Clearer insolvency safeguards – Stronger mechanisms for returning money quickly to customers if a provider fails
These steps come after FCA analysis revealed that e-money firm insolvencies between 2018 and 2023 resulted in average shortfalls of 65% in safeguarded funds — meaning thousands of consumers were left out of pocket.
📊 Quelle: Finextra
Why Critics Say It’s Not Enough
Consumer advocates argue that these reforms are reactive, not proactive — and that many of the risks they address have been known for years.
The UK’s e-money sector now serves around 10% of the population as a primary account, particularly among underbanked and digital-first consumers. Yet until now, protection mechanisms have lagged far behind traditional banking rules.
Further expert commentary:
- Pinsent Masons: FCA to clarify e-money safeguarding
- Fieldfisher: Changing of the safeguarding guard
- EY: UK Payments Regulation Spotlight (PDF)
What’s Behind the Reforms?
These changes are part of the FCA’s Consultation Paper CP24/20, which outlines a two-phase transformation:
- Short-term measures: Monthly reporting, external audits, enhanced resolution planning
- Long-term vision: A new safeguarding framework similar to the CASS regime used for investment firms, ensuring stronger legal separation and faster asset return
Final Take
The FCA is clearly tightening the regulatory net around e-money firms — a necessary move in light of past failures. But for many, it’s a case of fixing the roof after the storm has passed.
Better late than never — but the next wave of fintech innovation will demand even faster regulatory reflexes.
