Key takeaways
- E-money and payment firms safeguard customer funds under CASS 15; investment firms protect client money under CASS 7.
- The regimes share a structure: daily internal reconciliation, external reconciliation, correction of shortfalls, records and audit.
- They differ in legal protection, external reconciliation frequency, reporting and some calculation methods.
- Groups with both kinds of entity can run one reconciliation discipline applied under each set of rules.
Two regimes, one purpose
The UK protects money held for others through two main regimes. Investment firms follow the client money rules in CASS 7. Payment institutions and e-money institutions follow safeguarding rules, set out since 7 May 2026 in CASS 15 under PS25/12. Both exist to ensure that if the firm fails, the money it holds for customers is identifiable and returned quickly.
The distinction matters most at the boundary. A wealth platform that offers both investment accounts and an e-money wallet, or a payments firm that adds an investment product, must identify which money falls under which regime, and must not let money move between pools without the correct treatment.
Since PS25/12, safeguarding has moved much closer to the client money model in its daily disciplines. But important differences remain, and firms that run both, such as a wealth platform with an e-money wallet, need to apply the right rules to the right money.
The key differences
The table compares the two regimes on the points that matter most to finance and compliance teams.
| Point | CASS 7 client money | CASS 15 safeguarding |
|---|---|---|
| Who | Investment firms | Payment institutions and e-money institutions |
| Legal protection | Statutory trust | Segregation, or insurance or guarantee; no statutory trust currently |
| Internal reconciliation | Each business day | Each reconciliation day |
| External reconciliation | At least monthly | Each reconciliation day |
| Regular return | CMAR, monthly, CASS medium and large firms only | Monthly safeguarding return (REP027) |
| Audit | Annual CASS audit | Annual safeguarding audit above £100,000 |
| Resolution pack | CASS 10A | CASS 10A |
What is now similar
Both regimes require a defined calculation of what is owed and what is held, performed daily, with differences investigated and shortfalls corrected promptly. Both require accurate records by customer, acknowledgement letters from banks, due diligence on institutions holding the money, a resolution pack and an annual audit by a qualified auditor. A finance or compliance professional experienced in one will recognise most of the other.
Calculation methods also differ in detail. CASS 7 sets out standard methods for calculating the client money requirement, such as the individual client balance method. CASS 15 sets out how the safeguarding requirement and resource are calculated for each pool of relevant funds. Teams moving between regimes should not assume the same calculation applies.
The practical difference most teams notice first is external reconciliation: CASS 15 requires it on every reconciliation day, while CASS 7 allows monthly as a minimum. Firms moving from client money to safeguarding, or adding an e-money entity, often underestimate the effect of that change on their operations. Common questions on the CASS 15 side are answered in CASS 15 questions answered.
Running both
A group with both kinds of entity should keep the money strictly separate, in different accounts and pools, and apply each regime's calculation and reporting to its own entity. It can still run one reconciliation discipline, one break process and one set of controls, with entity-level results. Our guides to what client money is and CMAR and REP027 cover the reporting side.
Safeheld reconciles client money and safeguarded funds under their own rules in one platform, with entity-level results and evidence. See CASS 6 and CASS 7 software and CASS 15 software.
Frequently asked questions
What is the difference between safeguarding and client money?
Safeguarding applies to payment and e-money firms under CASS 15; client money applies to investment firms under CASS 7, which uses a statutory trust.
How often is external reconciliation required?
Each reconciliation day under CASS 15, and at least monthly under CASS 7.
Do both regimes require an audit?
Yes: an annual CASS audit for client money and an annual safeguarding audit above £100,000 for safeguarding firms.
Can a group run both regimes in one process?
Yes, with money kept separate and each regime's rules applied to its own entity.
References
- FCA Handbook, CASS 7.15 Records, accounts and reconciliations
- FCA Handbook, CASS 15.8 Records, accounts and reconciliations
- FCA, PS25/12: Changes to the safeguarding regime for payments and e-money firms
About Safeheld
Safeheld reconciles client money every day, resolves every difference and prepares every regulatory return for sign-off, for regulated firms in the United States, the United Kingdom, the European Union, Canada, Australia, Singapore and Hong Kong. To discuss your operations, contact us at safeheld.com/contact.
This article is for general information and does not constitute legal or regulatory advice.