What Must an RPAA Safeguarding Framework Contain?

Key takeaways

• Section 15 of the Retail Payment Activities Regulations requires every payment service provider that holds end-user funds to keep a written safeguarding-of-funds framework.
• The framework must cover liquidity, a daily ledger of each end user's balance, insolvency procedures for returning funds, and the legal and operational risks with their mitigations.
• A named senior officer approves it at least once a year and after material changes, and any board approves it at least annually.
• Section 16 requires shortfalls to be identified and investigated, and section 17 requires an independent review at least every three years.
• The requirements have applied since 8 September 2025, under the coming-into-force order published in November 2023.

What are the key facts on the RPAA safeguarding framework?

The safeguarding framework is the written document that shows how a payment service provider protects the funds it holds for its end users.

What is the framework for?

It must ensure end users have reliable, timely access to their funds, and get them back as soon as feasible if the PSP fails.

Section 15(1) of the RPAR requires a PSP that holds end-user funds to establish, implement and maintain a written framework with those two objectives, covering both funds in its safeguarding accounts and the proceeds of any insurance or guarantee. The framework sits beside the method chosen under section 20 of the RPAA: a trust account, or a separate account backed by insurance or a guarantee. Our guide to RPAA trust accounts and insurance compares the methods, and our overview of RPAA safeguarding covers the regime as a whole.

What must the framework contain?

Section 15 lists the contents, and the Bank of Canada guideline explains what it expects in each.

What does the ledger requirement mean in practice?

The PSP must be able to state, for every end user, what it held for them at the end of each day.

The Bank's guideline expects the ledger to show, for each end user, the funds held at the end of each day, split into funds safeguarded and funds not yet placed in a safeguarding account, with totals. It expects daily updating, with real-time updating as best practice. Because section 15(2)(b) classifies the ledger as an asset under the operational risk rules, it must be protected, backed up and recoverable like any critical system. Our guide to calculating end-user funds under the RPAA explains what goes into each balance.

When must the framework be reviewed?

At least once a year, and after any change in how funds are safeguarded or listed material changes.

Section 15(6) lists the triggers: opening or closing a safeguarding account, a change of account provider or account terms, and a change of insurance or guarantee provider or terms. Each review must be recorded with its date, scope, methodology and findings, and the findings go to the senior officer for approval. Separately, the PSP must notify the Bank of Canada at least five business days before a significant change, under section 20 of the RPAR, and must give the Bank at least 30 days' notice before an insurance or guarantee contract is cancelled or terminated, under section 14(2)(d).

How must shortfalls be handled?

They must be identified as soon as feasible, investigated immediately for root cause, and prevented from recurring.

Section 16 of the RPAR requires the PSP to identify, as soon as feasible, any instance in which end-user funds, or insurance or guarantee proceeds, would not have been payable to end users had an insolvency event occurred. Immediately after identifying one, it must investigate the root cause and, as soon as feasible, take measures to prevent it happening again. The Bank's guideline describes a shortfall as funds in trust or covered by insurance or a guarantee being less than the funds held, and treats daily checks as best practice. Instances are reported in the annual report under section 19.

What does the independent review involve?

At least every three years, a skilled person with no role in the framework must review compliance.

Under section 17, the reviewer may be internal or external but must not have been involved in establishing, implementing or monitoring the framework. The review covers compliance with section 20(1) of the RPAA and sections 13 to 16 of the RPAR. The PSP must record the reviewer's name, the date, the scope, the methodology and the findings, and report gaps, vulnerabilities and remedial measures to the senior officer.

Which account providers and arrangements does the framework rely on?

Accounts must be with eligible institutions, and the Bank expects a direct relationship with the account provider.

Section 13 of the RPAR requires the account holding end-user funds to be provided by an entity listed in paragraphs 9(a) to (d) or (f) to (h) of the RPAA, such as a bank or credit union, or by a foreign financial institution whose home regime has comparable standards on capital, liquidity, governance, supervision and risk management. The Bank's guidance adds that the account provider should acknowledge in writing that it has no interest in, recourse against or right over the funds for debts of the PSP or anyone else. Section 20(3) of the RPAA backs this up: no right of set-off or compensation may be asserted by the institution maintaining the account in respect of the funds in it.

The Bank also expects a direct relationship with the safeguarding account provider. It considers indirect arrangements, where funds are safeguarded through an intermediary PSP, unlikely to comply unless the PSP can show that the regulatory and operational barriers, including the validity of any trust and the complexity of returning funds, have been resolved. The framework's risk analysis under section 15(3) is where that case must be made.

What about Quebec and provincial deposit-takers?

Quebec trusts follow the Civil Code, and PSPs that take provincially insured deposits are outside section 20(1) for those funds.

The Bank's guideline explains that a trust arrangement governed by Quebec law must qualify as a trust under the Civil Code of Québec, or use the simple administration regime in which the PSP administers the funds as an administrator appointed by the beneficiary. Separately, section 20(2) of the RPAA disapplies section 20(1) for end-user funds held in a province by a PSP that accepts deposits insured or guaranteed under that province's law, to the extent the funds are covered. Both points belong in the framework's legal risk analysis, because they change how the trust or insurance would work on insolvency.

How does a framework's liquidity analysis work?

It compares the funds the PSP holds with the withdrawals it could face on its worst days.

Worked example. A Canadian payments app holds CAD 64.0 million of end-user funds on an average day. Its framework records the following liquidity analysis, based on twelve months of daily ledger data.

Same-day cash covers the worst single day 2.7 times and the worst three days 1.3 times, so the framework can show timely access even in a stressed week. The analysis is repeated at each annual review, and earlier if a material change, such as a new large business customer, alters the outflow pattern.

What should a PSP check in its framework?

These checks map each part of the framework to the regulation that requires it.

• State both objectives from section 15(1): timely access, and return of funds on insolvency.
• Describe liquidity arrangements and the assets used, all secure and liquid.
• Maintain the daily ledger by end user, split between safeguarded and not yet placed funds.
• Write the insolvency return procedure, naming who does the final reconciliation.
• Analyse legal and operational risks for each jurisdiction, account provider and insurer.
• Name the senior officer and record annual approval by the officer and any board.
• Schedule the independent review at least every three years and record its findings.

How does Safeheld help?

Safeheld reconciles the end-user ledger to safeguarding accounts every day for each entity and currency, and raises any shortfall as a break for investigation.

It produces the report pack for the Bank of Canada RPAA annual report, which the PSP reviews and completes. See daily reconciliation and RPAA reporting.

Frequently asked questions

What is an RPAA safeguarding framework?

A written framework, required by section 15 of the Retail Payment Activities Regulations, setting out how a PSP ensures end users can access their funds and get them back if it fails.

What must the framework include?

Liquidity arrangements, a daily ledger of each end user's balance, insolvency procedures for returning funds, an analysis of legal and operational risks, a named senior officer, approval and review arrangements, and review records.

Who approves the safeguarding framework?

The senior officer named in it, at least once a year and after material changes, and the board of directors, if there is one, at least once a year.

How often must the framework be reviewed?

At least once a year and after listed material changes, with an independent review of compliance at least every three years.

What is a shortfall under the RPAR?

An instance in which end-user funds, or insurance or guarantee proceeds, would not have been payable to end users had an insolvency event occurred. It must be investigated immediately and prevented from recurring.

When did the safeguarding requirements take effect?

On 8 September 2025, under the order fixing coming-into-force dates published in the Canada Gazette on 22 November 2023.

Can a PSP safeguard through another PSP's account?

The Bank of Canada expects a direct relationship with the safeguarding account provider and considers indirect arrangements through an intermediary PSP unlikely to comply unless specific regulatory and operational barriers are resolved.

Can the independent reviewer be an employee?

Yes, if they have the necessary skills and had no role in establishing, implementing or monitoring the framework.

References

• Retail Payment Activities Regulations (SOR/2023-229), sections 13 to 15
• Retail Payment Activities Regulations (SOR/2023-229), sections 16 to 20
• Retail Payment Activities Act (S.C. 2021, c. 23, s. 177), section 20
• Bank of Canada, Safeguarding end-user funds guideline (December 2024)
• Bank of Canada, Safeguarding of end-user funds: at a glance (February 2025, PDF)
• Canada Gazette Part II, Order fixing coming-into-force dates of the RPAA (22 November 2023)

About Safeheld

Safeheld is reconciliation and regulatory financial control software for regulated firms that hold client money. For Canadian PSPs it reconciles the end-user ledger to every safeguarding account daily and keeps the shortfall and review records the framework requires. To discuss your safeguarding operations, contact us at safeheld.com/contact.

This article is general information on Canadian retail payment rules and is not legal or regulatory advice.