Key takeaways
- A statutory trust would make customer funds held by payment and e-money firms legally the property of customers, held on trust by the firm.
- The FCA proposed it in CP24/20 as the second stage of its safeguarding reforms, known as the Post-Repeal Regime.
- It is not in force. The current rules, in force since 7 May 2026, are the Supplementary Regime under PS25/12.
- The FCA will review the Supplementary Regime after a full audit period, and any statutory trust depends on the Treasury changing the underlying legislation.
What a statutory trust is
A trust is a legal arrangement in which one party holds property for the benefit of another. A statutory trust is one created by law rather than by agreement. Applied to safeguarding, it would mean that customer funds held by a payment or e-money firm are, by law, held on trust for its customers. If the firm failed, those funds would not form part of its estate available to other creditors.
Investment firms already hold client money on a statutory trust under CASS 7. The proposal was to bring payment and e-money firms closer to that model.
Where it stands
In CP24/20, the FCA proposed two stages. The first, an interim stage now called the Supplementary Regime, strengthens record keeping, reconciliation, reporting and audit within the existing regulations. The FCA finalised it in PS25/12 and it has applied since 7 May 2026.
The second stage, the Post-Repeal Regime, would replace the safeguarding provisions of the Electronic Money Regulations and Payment Services Regulations with FCA rules, including a statutory trust. The FCA has not implemented it. It has said it will first review how the Supplementary Regime works after a full audit period, and the change depends on the Treasury amending the legislation. Any statement that payment firms already hold funds on statutory trust is therefore incorrect.
| Supplementary Regime (in force) | Post-Repeal Regime (proposed) | |
|---|---|---|
| Legal basis | EMRs and PSRs, plus CASS 15 | FCA rules after legislative repeal |
| Customer funds held on statutory trust | No | Yes |
| Daily reconciliation | Yes | Yes |
| Monthly safeguarding return | Yes | Yes |
| Annual safeguarding audit | Yes, above £100,000 | Expected to continue |
| Status | In force since 7 May 2026 | Not implemented; subject to review |
What would change for firms
For customers, a statutory trust would strengthen and simplify their claim on insolvency. For firms, the operational effect would be less dramatic than the legal one, because the daily disciplines of the Supplementary Regime would remain. A firm already reconciling accurately every day, correcting shortfalls the same day and keeping a current resolution pack would adapt to a trust model far more easily than one still catching up with CASS 15.
The CP24/20 proposals also envisaged that relevant funds would be received directly into designated safeguarding accounts, rather than first into other accounts and moved later. For firms whose card settlements or collections currently land in operating accounts, that would be the larger practical change, and it is worth understanding flow by flow now how funds would need to be rerouted. How customers are protected today, without a trust, is explained in what happens to customer money if a payment or e-money firm fails.
How to prepare
The best preparation is to run the Supplementary Regime well. Its record keeping and reconciliation requirements are designed to be the foundation for any later regime, and the FCA's review after the first audit period will be informed by how firms perform under it. Firms should also watch for Treasury consultation on the underlying legislation. Our FCA safeguarding checklist covers the current requirements point by point.
Safeheld runs daily safeguarding reconciliation and evidence under CASS 15, which is the operational base for any later trust model. See Safeheld reconciliation.
Frequently asked questions
Do payment firms hold customer funds on statutory trust?
No. A statutory trust was proposed for the Post-Repeal Regime, which has not been implemented.
What is the Post-Repeal Regime?
The FCA's proposed second stage of safeguarding reform, replacing the safeguarding provisions of the EMRs and PSRs with FCA rules including a statutory trust.
When might the statutory trust apply?
Not before the FCA reviews the Supplementary Regime after a full audit period, and only if the Treasury changes the legislation.
How should firms prepare?
By operating the current CASS 15 requirements well, since they are the foundation for any later regime.
References
- FCA, PS25/12: Changes to the safeguarding regime for payments and e-money firms
- FCA, Policy Statement PS25/12 (full text)
- FCA Handbook, CASS 15.8 Records, accounts and reconciliations
- The Electronic Money Regulations 2011
- The Payment Services Regulations 2017
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.