Dear CEO Letter for Fintech Firms – APIs and EMIs

compliance fca regulatory authorisation registration

On the 4th July 2019: #FCA issues Dear CEO Letter to #EMoney & #PaymentServices firms on ‘Safeguarding arrangements of non-bank payment service providers’ and provide a #compliance report.

The FCA report states that;

The significant shortcomings we identified in firms’ safeguarding arrangements included:

• poor understanding of which funds are relevant and should be segregated;

• delays in segregating funds following receipt; and

• failing to check that the correct amounts are being segregated frequently enough (i.e. through reconciliation processes)

There are various other key points throughout the document, so you will need to be able to answer;
  1. When did you last review your Accounts Safeguarding Policy?
  2. Are funds segregated on receipt?
  3. Do you hold relevant funds “overnight”?
  4. If yes, what do you do with them? And,
  5. How do you avoid commingling risk?
  6. How/when/where do you remove your fees?
  7. How are the accounts named? Please provide an example.
  8. How often are they reconciled?
Main findings and areas to ensure you are comfortable with;
  • Some firms need to be clearer about how their business models work and which funds are relevant and should be safeguarded.
  • Some firms were not segregating relevant funds on receipt. These firms need to ensure that relevant funds are segregated as quickly as possible when they receive them.
  • he checks we saw to ensure the correct amounts are being safeguarded were not always as frequent or accurate as they should be.
  • In some cases, firms with networks of agents or distributors did not have adequate processes to ensure that relevant funds are segregated on receipt.
  • Firms need to ensure they have sufficient oversight of their arrangements for managing the risks to customer funds. This includes sufficient detail and rationale in their documentation and regular, effective monitoring and review of safeguarding processes. This is particularly relevant where firms have rapidly evolving business and operating models.
E-Money Firms must complete and return the Safe Guarding Attestation – Electronic Money Institutions 
Deadline of 31 July 2019

If you need any assistance with your assessments, or the attestation forms, please contact us on

0207 097 1434 or email PSRS@complianceconsultant.org