N/A — Industry-wide
London, United Kingdom
The UK Financial Conduct Authority published policy statement PS25/12 introducing strengthened safeguarding requirements for authorised electronic money institutions, payment institutions, and small EMIs. The policy became effective in August 2025 with interim compliance measures required by May 2026 and a full CASS-style end-state regime planned following the repeal of the Electronic Money Regulations and Payment Services Regulations. The rules aim to enable faster regulatory intervention and quicker return of client funds upon firm failure. Small payment institutions may opt into the enhanced regime. This represents a significant tightening of the UK's approach to EMI and PI client fund protection with direct relevance to BaaS and embedded finance models operating in the UK.
Verified from source: The FCA published Policy Statement PS25/12 on 07/08/2025, following Consultation Paper CP24/20 (closed 17/12/2024), regarding changes to the safeguarding regime for payments and e-money firms.
- UK-based BaaS and embedded finance providers using EMI or PI licenses must prepare for enhanced safeguarding compliance by May 2026
- The CASS-style regime will bring EMI/PI safeguarding closer to investment firm standards, increasing operational and compliance costs
- May influence EU regulators considering similar post-MiCA safeguarding enhancements
- Faster fund return mechanisms could reduce counterparty risk for fintech partners of UK-licensed EMIs