Key takeaways
- Relevant funds must be kept segregated from the firm's own money from receipt (EMRs regulation 21(1), PSRs regulation 23(5)).
- If still held at the end of the business day following receipt, they must be in a safeguarding account or invested in approved assets (EMRs regulation 21(2), PSRs regulation 23(6)).
- CASS 15.8.35R tests this every reconciliation day by comparing the D+1 segregation requirement with the D+1 segregation resource, which is items A and C of the safeguarding resource.
- A D+1 shortfall must be paid in by the end of the reconciliation day, using the firm's own money if the relevant funds are not available (CASS 15.8.51R).
- D+1 segregation is a different deadline from allocating receipts to clients under CASS 15.2.5R, although both run to the end of the next business day.
What are the key facts on D+1?
D+1 is the deadline by which relevant funds must reach a safeguarding account or approved assets.
| Item | Position |
|---|---|
| Rule | EMRs regulation 21(2), PSRs regulation 23(6); tested under CASS 15.8.35R |
| Regulator | Financial Conduct Authority |
| Applies to | Safeguarding institutions using the segregation method |
| Deadline | End of the business day following the day of receipt; any D+1 shortfall corrected by the end of the reconciliation day |
| Last checked | 11 October 2026, against the FCA Handbook and PS25/12 |
What does D+1 mean in the regulations?
D+1 means that relevant funds received on day D and still held at the end of day D+1 must be placed with a bank, the Bank of England or an authorised custodian in a designated safeguarding account.
The regulations impose two duties. First, relevant funds must be kept segregated from any other funds the firm holds, from the moment of receipt (EMRs regulation 21(1); PSRs regulation 23(5)). Second, where the firm still holds them at the end of the business day following the day on which they were received, it must either place them in a separate account with an authorised credit institution or the Bank of England, or invest them in secure, liquid assets approved by the FCA and place those assets in a separate account with an authorised custodian (EMRs regulation 21(2); PSRs regulation 23(6)). The account must be designated to show that it holds safeguarded funds.
D+1 is therefore a latest time, not a target. Money paid out to the payee before the end of D+1 never needs to reach a safeguarding account, but it must still be segregated while the firm holds it.
When does day zero start?
Day zero is the day the firm receives the funds, which the FCA describes as the point the firm becomes entitled to them, often when they are credited to an account in its name.
The FCA's safeguarding requirements page uses that description. Three points refine it. The deadline is counted in business days, so a receipt on a Friday must be placed by the end of the following Monday if that is a business day. E-money institutions receiving funds by payment instrument, such as a card, need not safeguard them until they are credited or made available, but must do so by the end of five business days after the e-money was issued (EMRs regulation 20(4)). And a firm that settles through a Bank of England settlement account in a designated payment system may leave funds awaiting settlement in that account under EMRs regulation 21(4A) and PSRs regulation 23(9); the Bank of England sets out how its client funds settlement accounts work and caps overnight balances in settlement-only accounts.
Business day for the deadline and reconciliation day for the daily checks are different terms. A reconciliation day also excludes days on which a relevant foreign market is closed, so a firm may have a D+1 deadline on a day when it does not have to reconcile a particular currency. Our guide to relevant funds explains which receipts start the clock.
How does CASS 15 test the D+1 deadline?
At each internal reconciliation the firm compares its D+1 segregation requirement with its D+1 segregation resource.
The D+1 segregation requirement is the total relevant funds that should be held under EMRs regulation 21(2) or PSRs regulation 23(6), that is, the funds whose D+1 deadline has passed. The D+1 segregation resource is the sum of items A and C of the safeguarding resource in CASS 15.8.26R: balances in relevant funds bank accounts, and the value of relevant assets in relevant assets accounts. Item B (segregated funds not yet in a bank account, such as funds held by agents) and item D (insurance or guarantee cover) are excluded, because they are not where the regulations require D+1 money to be.
CASS 15.8.35R requires the comparison. Under CASS 15.8.13R it is not needed where all relevant funds are already in relevant funds bank accounts, or were invested in relevant assets before the last internal reconciliation. CASS 15.8.14G explains the purpose: to check that the right amount has been paid in or invested. PS25/12 confirms the D+1 comparison replaced a separate deposit resource and requirement reconciliation proposed in consultation, so the final rules check D+1 inside the internal reconciliation rather than through an additional reconciliation.
What happens if the D+1 resource is short?
The firm must find the reason and pay in or invest enough to remove the shortfall by the end of the reconciliation day.
CASS 15.8.51R sets the deadline and requires the firm to use its own money if relevant funds cannot be used, for example because a third party is late in releasing them. CASS 15.8.54G adds that the firm must top up from its own funds even if this creates a surplus, which later reconciliations then resolve. Where the shortfall reflects a breach, CASS 15.8.55G expects steps to stop it happening again. If the firm cannot or materially fails to pay in a shortfall, it must notify the FCA under CASS 15.8.60R(3). The month's last D+1 comparison is reported in questions 22 to 25 of the monthly safeguarding return.
How does D+1 work in practice?
The worked example follows one week of receipts at a payment institution that collects customer payments into a segregated collection account and sweeps them to its safeguarding bank.
| Day | Event | Amount (GBP) | D+1 position |
|---|---|---|---|
| Monday | Customer payments received into the collection account | 1,250,000 | Must be in a safeguarding account by end of Tuesday |
| Tuesday 15:00 | Sweep to the safeguarding account | 1,010,000 | A £240,000 receipt arrived after the sweep file closed and stays behind |
| Tuesday | Further receipts | 980,000 | Deadline end of Wednesday |
| Wednesday 10:00 | Internal reconciliation: D+1 requirement | 8,940,000 | Includes Monday receipts still held |
| Wednesday 10:00 | Internal reconciliation: D+1 resource (items A and C) | 8,700,000 | Shortfall of 240,000 |
| Wednesday 11:30 | £240,000 moved from collection account to safeguarding account | 240,000 | Shortfall corrected within the reconciliation day |
The firm was late: Monday's £240,000 should have been in the safeguarding account by the end of Tuesday. The D+1 comparison found it the next morning and the firm corrected it the same day, as CASS 15.8.51R requires. It records the cause, changes the sweep cut-off so late receipts are caught, logs the event for the auditor's breaches schedule, and assesses whether a notification is due. Had the collection bank delayed the transfer, the firm would have paid £240,000 of its own money into the safeguarding account and recovered it once the collection account was released.
What usually causes a D+1 failure?
Most D+1 failures come from timing gaps between where money lands and when it is moved, rather than from any dispute about what is owed.
| Cause | What happens | Control |
|---|---|---|
| Sweep cut-off too early | Receipts arriving after the sweep file closes wait a further day | Later or second sweep; same-day check of residual balances |
| Acquirer or partner settles into an operating account | Relevant funds sit with the firm's own money and are not segregated | Redirect settlement to a segregated collection account, or sweep on arrival |
| Bank holiday in one currency | The transfer cannot settle on the expected day | Plan around the payment calendar and pre-fund from own money if needed |
| Unmatched receipts left aside | Funds are not moved because nobody knows whose they are | Move unidentified receipts to safeguarding while they are investigated |
| Manual transfer not released | The payment is prepared but not approved in time | Approval routing with escalation before the end of day |
Each of these is visible in the daily records. A firm that tracks residual balances in its collection accounts at the end of each business day will usually see a D+1 problem a day before the reconciliation does.
How is D+1 different from allocating receipts?
Segregation moves the money; allocation records which client it belongs to, and both have a next business day limit.
CASS 15.2.5R requires relevant funds to be allocated to an individual client promptly, and no later than the end of the business day following receipt or identification, with unallocated amounts recorded as unallocated relevant funds meanwhile. A firm can meet D+1 for a receipt it has not yet allocated, and the reverse. Both failures show up in the daily records, but in different places: allocation in the requirement, segregation in the D+1 comparison. See unallocated and unidentified receipts.
What should a firm check?
These controls keep D+1 failures rare and visible.
- List every account that receives relevant funds and the sweep or transfer that moves money from it to safeguarding.
- Set sweep cut-offs late enough to catch the day's final receipts, or add a second sweep.
- Record the receipt date of every relevant fund, so the D+1 requirement can be calculated rather than estimated.
- Run the CASS 15.8.35R comparison at each internal reconciliation unless CASS 15.8.13R applies, and keep the result under CASS 15.8.9R.
- Pre-approve the use of own funds for top-ups, so a shortfall can be corrected the same day.
- Track card receipts for e-money against the five business day limit separately.
- Review repeated D+1 shortfalls for root cause and notification under CASS 15.8.60R.
How does Safeheld help?
Safeheld runs the D+1 comparison inside each internal reconciliation and raises any shortfall as a break for same-day resolution.
Its 24-hour and 7-day funding forecasts show when receipts will need to move, and top-ups from the firm's own funds are routed for approval before money moves. See cash positions and funding and our CASS 15 and PS25/12 guide.
Frequently asked questions
What does D+1 mean in safeguarding?
Relevant funds received on day D and still held at the end of the next business day must be in a safeguarding account or invested in approved assets.
Where does the D+1 rule come from?
From regulation 21(2) of the Electronic Money Regulations 2011 and regulation 23(6) of the Payment Services Regulations 2017. CASS 15.8.35R tests it.
What is the D+1 segregation resource?
The sum of items A and C of the safeguarding resource: balances in relevant funds bank accounts and the value of relevant assets in relevant assets accounts.
What is the deadline to fix a D+1 shortfall?
The end of the reconciliation day on which it is found, using the firm's own money if the relevant funds are not available (CASS 15.8.51R).
Do funds have to be segregated before D+1?
Yes. Relevant funds must be kept segregated from the firm's own money from receipt. D+1 is the deadline for placing them in a safeguarding account or approved assets.
Does the D+1 deadline apply to card receipts for e-money?
E-money card receipts need not be safeguarded until credited or made available to the firm, but must be safeguarded within five business days of the e-money being issued.
Is D+1 the same as the allocation deadline?
No. CASS 15.2.5R sets a separate deadline for allocating receipts to clients, also by the end of the next business day.
References
- The Electronic Money Regulations 2011, regulation 21
- The Electronic Money Regulations 2011, regulation 20
- The Payment Services Regulations 2017, regulation 23
- FCA Handbook Glossary, D+1 segregation requirement
- FCA Handbook, CASS 15.8 Records, accounts and reconciliations
- FCA Handbook, CASS 15.2 Organisational requirements
- FCA, PS25/12: Changes to the safeguarding regime for payments and e-money firms (PDF)
- Bank of England, Access to UK payment systems for non-bank payment service providers
About Safeheld
Safeheld is reconciliation and regulatory financial control software for regulated firms that hold client money. It runs the internal reconciliation and D+1 comparison for each pool and currency, forecasts funding needs and routes top-ups for approval. 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.