The obligation
Regulated payment and e-money firms must keep relevant customer funds separate from their own money, either in a segregated account at a credit institution or under an approved insurance or guarantee arrangement.
The purpose is simple: if the firm becomes insolvent, customer funds sit outside the general pool available to creditors.
How it works day to day
Firms perform frequent reconciliations between what customers are owed and what sits in safeguarded accounts, and correct any shortfall immediately.
Governance matters as much as arithmetic. Clear ownership, documented methodology and independent review are all expected.
Where firms get it wrong
Common failures include mixing operational fees with customer funds, delayed reconciliation, unclear account designation at the partner bank, and no tested wind-down plan.
Regulators treat safeguarding breaches seriously because the harm falls directly on customers.
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