CASS 15: Strengthening client money safeguarding for payment services and e-money firms

The financial services landscape is set for significant change as new FCA rules come into effect on 7 May 2026, introducing enhanced client money safeguarding requirements for electronic money institutions (EMI’s) and payment services firms (PSD’s).

Called the CASS 15 framework, it effectively brings EMIs and payment services firms under the same regime as investment businesses.

Why the change?

The FCA’s decision to implement CASS 15 stems from growing concerns over inadequate protection of client monies under the previous safeguarding regime. As the payments sector has evolved rapidly, with increasing volumes of consumer funds flowing through EMIs and payment services providers, the FCA recognises that existing protections were insufficient to prevent serious consumer harm in the event of firm failures.

Key requirements under CASS 15

The new framework introduces four fundamental requirements that will reshape how payment firms manage client money.

• Daily reconciliations: Firms must now perform safeguarding reconciliations at least once every business day to ensure all client monies are properly accounted for and protected. This daily discipline will provide real-time oversight of safeguarding arrangements. 
• Annual independent audits: All firms within scope must arrange annual audits of their safeguarding compliance, conducted by qualified auditors with expertise in CASS requirements. These audits will provide independent assurance that safeguarding arrangements are operating effectively. 
• Monthly FCA reporting: Payment firms will be required to submit monthly regulatory returns to the FCA, providing detailed information about their safeguarding arrangements. This enhanced reporting will give the regulator much greater visibility over the sector. 
• Resolution packs: Firms must maintain comprehensive resolution packs detailing where funds are held, lists of agents and distributors, and procedures for managing client assets. These documents will be crucial for protecting consumers if a firm fails.

Beyond these core requirements, CASS 15 introduces several other important protections, including:

• Enhanced due diligence requirements when appointing third parties to manage or hold client funds. 
• Stricter conditions on safeguarding insurance policies to ensure they pay out when needed. 
• Contingency planning requirements for firms using insurance-based safeguarding approaches.

Preparing for implementation

With the May 2026 implementation date approaching, firms should begin preparation now. The transition period allows for a systematic approach to compliance, but the scale of change means early action is essential.

Firms should start by conducting a comprehensive gap analysis of their current safeguarding arrangements against the new CASS 15 requirements. This will identify areas where systems, processes, and controls need strengthening.

Equally important is the selection and appointment of qualified auditors experienced in CASS compliance. Given the specialist nature of these audits, firms should engage with potential auditors early to ensure capacity and expertise align with their needs.

Documentation will also be crucial. Firms need to comprehensively document how client money is held and the controls protecting it. The resolution pack requirements mean this documentation must be detailed, current and accessible.

Looking ahead

CASS 15 represents a step-change in regulatory expectations for the payments sector. While the increased compliance burden will require investment in systems and processes, the enhanced consumer protection should strengthen confidence in the sector and potentially reduce regulatory intervention in the long term.

Firms that approach CASS 15 proactively, treating it as an opportunity to strengthen their risk management and client protection capabilities, will be best positioned to thrive under the new regime. Those that delay preparation risk facing a challenging compliance scramble as the May 2026 deadline approaches.

The message from the FCA is clear: client money safeguarding is now a boardroom priority, and the standards expected are higher than ever before.

To get ahead of these changes, contact Michael Cook or Alex Tushingam.