Key takeaways
- CASS 15 applies to authorised payment institutions, e-money institutions, credit unions issuing e-money and small payment institutions that opt in.
- Internal and external reconciliations are required at least once each reconciliation day, at reconciliation points fixed at the same times every day.
- The safeguarding resource is items A to D under CASS 15.8.26R; the requirement is positive client balances plus unallocated receipts under CASS 15.8.30R.
- Where internal records and a third party disagree and the difference is unresolved, the firm assumes the record showing the higher requirement is correct.
- Records are kept for 5 years, and acknowledgement letters until 5 years after the last related account closes.
What are the key facts on CASS 15?
CASS 15 is the FCA Handbook chapter that sets how payment and e-money firms safeguard relevant funds.
| Item | Position |
|---|---|
| Rule | CASS 15, supported by CASS 10A, SUP 3A and SUP 16.14A |
| Regulator | Financial Conduct Authority |
| Applies to | Authorised payment institutions, e-money institutions, credit unions issuing e-money, opted-in small payment institutions |
| Core cycle | Internal and external reconciliation every reconciliation day; monthly return; annual audit unless exempt |
| In force | 7 May 2026 |
| Last checked | 11 October 2026, against the FCA Handbook and PS25/12 |
Which firms does CASS 15 apply to?
It applies to every firm that must safeguard relevant funds under the EMRs or PSRs, and to small payment institutions that choose to.
CASS 15.1.2R sets the scope. It does not apply to payments where both payer and payee are served from outside the UK (CASS 15.1.5G), and an e-money institution with unrelated payment services runs two separate pools (CASS 15.1.6G). Our CASS 15 and PS25/12 guide covers the regime as a whole.
How is CASS 15 different from CASS 7?
CASS 7 governs client money held by investment firms; CASS 15 governs relevant funds held by payment and e-money firms under different legislation.
The two chapters share ideas, such as daily reconciliation and resolution packs, but the legal basis, terminology and returns differ. CASS 7 client money is held on trust; relevant funds under CASS 15 are protected through the asset pool priority in the EMRs and PSRs. A group with both businesses applies each chapter to the right entity. See EMI safeguarding vs CASS 7.
How often must firms reconcile, and what is a reconciliation day?
At least once each reconciliation day, for both the internal and the external reconciliation.
CASS 15.8.19R and CASS 15.8.42R set the frequency. A reconciliation day is a business day other than a weekend, Christmas Day, Good Friday or a UK bank holiday, and for a reconciliation involving a non-UK market, not a day on which that market is closed. Firms may reconcile more often (CASS 15.8.20G). Our guide to CASS 15 reconciliation explains the two reconciliations in detail.
What is a reconciliation point?
It is the fixed time of day as at which the internal reconciliation is performed, chosen by the firm and kept the same every day.
CASS 15.8.21R requires the firm to select its reconciliation point or points, at the same time or times each day, and to base each reconciliation on its records as at that point. CASS 15.8.22R requires the points and frequency to be recorded in the firm's policies. The external reconciliation should, where possible, use third-party records as at the same point (CASS 15.8.40G).
What are items A to D of the safeguarding resource?
They are the four places relevant funds can be: safeguarding bank accounts, other segregated funds, relevant assets and insurance or guarantee cover.
| Item | What it includes | In the D+1 resource? |
|---|---|---|
| A | Balances in relevant funds bank accounts, less certain non-relevant funds in Bank of England settlement accounts | Yes |
| B | Relevant funds segregated but not in a bank account or invested, such as cash or funds held by agents | No |
| C | Value of relevant assets in relevant assets accounts, at the previous business day's close | Yes |
| D | Relevant funds protected by the insurance or guarantee method | No |
The items are set by CASS 15.8.26R, with examples of item B in CASS 15.8.27G. The requirement side is the sum of positive individual client balances plus unallocated receipts (CASS 15.8.30R).
What is the standard method, and when can a firm use another?
The standard method is the internal reconciliation set out in CASS 15.8.26R to 15.8.35R; any other method is non-standard and needs an auditor's report before use.
Under CASS 15.8.37R a firm that wants to use a non-standard method must document why the method achieves the purposes of the internal reconciliation and obtain a reasonable assurance report from an independent auditor before using it, and again before any material change. CASS 15.8.38R requires reasonable steps to make sure the auditor is suitably skilled and eligible. The monthly return asks whether a non-standard method was used. The standard method maps directly to the components the return asks for and needs no auditor's report in advance. A non-standard method may suit a firm whose ledgers cannot produce individual client balances in the standard form at a single reconciliation point, but it brings the cost and lead time of the auditor's report, which must be repeated before any material change to the method.
What happens when the firm's records and a bank or custodian disagree?
The firm must investigate and resolve the difference without undue delay, and until it does, treat the record showing the higher requirement as correct.
That is CASS 15.8.56R and 15.8.57R. If the firm will be unable to resolve a discrepancy, or materially fails to, it must notify the FCA under CASS 15.8.60R(5); see notifying the FCA of a safeguarding breach.
Do firms using insurance or a guarantee still reconcile?
A firm whose relevant funds are fully covered by an unlimited insurance policy or guarantee does not need an internal reconciliation, but must still calculate its safeguarding requirement daily.
CASS 15.8.11R sets this out and requires the firm to record the date, the actions taken and the outcome. Insurance policies and guarantees are not themselves subject to external reconciliation (CASS 15.8.49G), but the firm must meet the conditions and notice periods in CASS 15.5.
How quickly must receipts be allocated to clients?
Promptly, and no later than the end of the business day after receipt, with anything not yet allocated recorded as unallocated relevant funds.
CASS 15.2.5R sets the deadline, and receipts that cannot yet be identified are investigated and recorded as unidentified relevant funds under CASS 15.2.9R. Unallocated receipts count in full towards the safeguarding requirement. This is a separate deadline from moving money into a safeguarding account, which the D+1 rule in the EMRs and PSRs governs.
How are mixed remittances and other currencies handled?
Mixed remittances need a written policy, and funds held in a different currency need a daily top-up.
A firm that receives payments combining relevant funds and other money must keep a written policy showing how it estimates and separates the relevant part (CASS 15.3.2R). Where it holds relevant funds in a currency other than the one received or owed, it must adjust the amount on each internal reconciliation day so that it is at least equal to the original currency amount at the previous day's closing spot rate (CASS 15.3.3R).
What records must be kept, and for how long?
Records that distinguish relevant funds at any time, show each client's entitlement and evidence every reconciliation, kept for at least 5 years.
CASS 15.8.3R requires records that distinguish relevant funds from other funds at any time and without delay. CASS 15.8.8R requires the firm to be able to determine each client's total promptly and to keep records for 5 years from the later of creation or last modification. CASS 15.8.9R requires each reconciliation to record its date and time, actions, outcome and, where relevant, the D+1 comparison. Countersigned acknowledgement letters are kept until 5 years after the last related account closes (CASS 15.7.10R).
What are acknowledgement letters and bank due diligence for?
Letters confirm each safeguarding account is held for customers and free of the bank's claims; due diligence confirms each bank or custodian is a suitable place for the money.
CASS 15.7.3R requires a letter in the CASS 15 Annex 1 template for every relevant funds bank account, and CASS 15.7.4R for every relevant assets account, reviewed at least annually (CASS 15.7.12R). CASS 15.6.1R requires due skill, care and diligence when selecting and periodically reviewing banks, custodians and insurers, including whether to diversify (CASS 15.6.5R). See safeguarding acknowledgement letters and the rules on bank due diligence and diversification in CASS 15.6.
What does one day's internal reconciliation look like?
The worked example shows a payment institution's internal reconciliation at its 16:00 reconciliation point.
| Line | Amount (GBP) |
|---|---|
| Item A: relevant funds bank accounts | 21,450,300 |
| Item B: funds held by agents, segregated | 312,800 |
| Item C: relevant assets at previous close | 5,000,000 |
| Item D: insurance cover | 0 |
| Safeguarding resource | 26,763,100 |
| Positive client balances | 26,701,950 |
| Unallocated receipts | 48,600 |
| Safeguarding requirement | 26,750,550 |
| Excess | 12,550 |
| D+1 requirement | 26,320,000 |
| D+1 resource (items A and C) | 26,450,300 |
| D+1 position | Covered, with 130,300 to spare |
The resource exceeds the requirement by £12,550, which the firm may withdraw under CASS 15.8.50R. The D+1 comparison shows everything due in a safeguarding account or invested is there. Agent-held funds of £312,800 count in the resource but not in the D+1 resource, because the D+1 deadline requires money in safeguarding accounts or approved assets. The firm records the outcome under CASS 15.8.9R, including the time, the actions taken and the D+1 result, so the record can feed the monthly return directly.
What should a firm confirm first?
These ten points cover the questions an auditor or supervisor is most likely to start with.
- The firm's category and every pool of relevant funds it holds.
- The reconciliation points, recorded in policy and used every day.
- A holiday calendar for each currency and market used to set reconciliation days.
- The internal reconciliation method, standard or non-standard with an auditor's report.
- Items A to D and the requirement calculated as CASS 15.8.26R and 15.8.30R set out.
- The D+1 comparison at each internal reconciliation, unless CASS 15.8.13R applies.
- External reconciliation currency by currency and asset by asset.
- A countersigned acknowledgement letter for every safeguarding and relevant assets account.
- Dated due diligence and diversification reviews for every bank, custodian and insurer.
- A named individual with safeguarding oversight under CASS 15.2.4R.
How does Safeheld help?
Safeheld runs the internal and external reconciliation for each entity and currency every reconciliation day, raises and resolves breaks, and produces the monthly return, resolution pack and audit packs from the same records.
See daily reconciliation.
Frequently asked questions
When is the monthly safeguarding return due?
Within 15 business days of the end of each calendar month, under SUP 16.14A.3R.
Who needs a safeguarding audit?
Authorised payment institutions and e-money institutions, unless they have not been required to safeguard more than £100,000 at any time for a period of at least 53 weeks.
How quickly must the resolution pack be produced?
Within 48 hours of an insolvency appointment or a request from the FCA or the Bank of England (CASS 10A.1.7R).
What is the D+1 deadline?
Relevant funds still held at the end of the business day after receipt must be in a safeguarding account or approved assets.
When must the FCA be notified?
Without delay, in writing, when any of the six circumstances in CASS 15.8.60R arises.
Who must oversee safeguarding?
A single director or senior manager of sufficient skill and authority, under CASS 15.2.4R.
Does CASS 15 create a statutory trust?
No. A statutory trust was proposed for a later regime that has not been implemented.
Do small payment institutions have to follow CASS 15?
Only if they opt in to safeguarding, in which case it applies as if they were an authorised payment institution.
References
- FCA Handbook, CASS 15 Payment services and electronic money: safeguarding
- FCA Handbook, CASS 15.1 Purpose and application
- FCA Handbook, CASS 15.2 Organisational requirements
- FCA Handbook, CASS 15.5 The insurance or guarantee method
- FCA Handbook, CASS 15.6 Selection and appointment of third parties
- FCA Handbook, CASS 15.7 Acknowledgement letters
- FCA Handbook, CASS 15.8 Records, accounts and reconciliations
- FCA, PS25/12: Changes to the safeguarding regime for payments and e-money firms (PDF)
About Safeheld
Safeheld is reconciliation and regulatory financial control software for regulated firms that hold client money. It covers the daily CASS 15 cycle, from reconciliation and break resolution to the monthly return and audit evidence, for every entity and currency. To discuss your safeguarding operations, contact us at safeheld.com/contact.
This article is general information on the UK safeguarding rules and is not legal or regulatory advice.