LONDON (Reuters) -Britain’s Monetary Conduct Authority (FCA) mentioned on Thursday it could roll out stricter guidelines for digital cost companies from Could 2026 to higher safeguard prospects’ cash.
The regulator, which first laid out proposed reforms for cost companies in September, mentioned firms can be required to maintain buyer cash separate from their very own funds, in order that it could possibly be returned if the agency fails.
The funds sector has come below better scrutiny as extra customers have change into uncovered to the danger of poor safeguarding. Between 2017 and 2022, the usage of present accounts with on-line cash and cost establishments – relatively than conventional banks – has surged five-fold, a FCA survey reveals.
Beneath the tighter guidelines, bigger cost companies will likely be topic to month-to-month reporting and annual audits, and they are going to be required to conduct day by day checks to make sure the correct sum of money is being safeguarded to guard prospects.
The principles will apply to cost establishments, e-money establishments (EMIs) and credit score unions that subject e-money, the regulator mentioned.
EMIs flooded London during the last decade, benefiting from a lighter regulatory burden in comparison with banks.
Final month overseas trade dealer Argentex, an e-money establishment (EMI) since 2018, fell into particular administration after succumbing to market volatility following a decline within the firm’s liquidity place.
Failed cost companies had common shortfalls of 65% of their prospects’ funds over a five-year interval to mid-2023, the FCA mentioned.
“Folks depend on cost companies to assist handle their monetary lives. However too usually, when these companies fail, their prospects are overlooked of pocket,” mentioned Matthew Lengthy, director of funds and digital belongings on the FCA.
“We’ll be watching intently to see if companies seize the chance and make efficient enhancements that their prospects rightly deserve – this can assist us to find out whether or not any additional tightening of guidelines is critical.”
UK Finance, a foyer group for the finance trade, mentioned it was necessary that the brand new safeguarding guidelines have been assessed for his or her impression and effectiveness earlier than any additional modifications have been made.
“We assist a strong and efficient safeguarding regime that protects prospects with out putting unrealistic calls for on companies, significantly smaller companies,” a spokesperson mentioned.
“Getting the steadiness proper means having guidelines which might be sensible, proportionate, and internationally aggressive.”
(Reporting by Iain Withers and Kirstin Ridley, Enhancing by Ed Osmond)
