The financial services regulatory landscape is evolving rapidly. Following the Financial Conduct Authority’s (FCA) September 2024 consultation paper the regulator has now issued CASS 15.
This is a new chapter in the Client Assets Sourcebook that will fundamentally change how payment institutions, e-money institutions and credit unions handle client funds. With an effective date of 7 May 2026, firms must act now. This guide provides a clear overview of what’s changing, what you need to do and what to watch out for.
Why now?
The FCA’s decision to introduce CASS 15 follows longstanding concerns that e-money and payment institutions were operating under safeguarding standards that fell significantly short of those applied to investment businesses. High-profile firm failures in recent years exposed gaps in how client money was protected and returned — CASS 15 is the regulator’s direct response to those shortcomings.
What is CASS 15?
In August 2025, the FCA published its final safeguarding rules through the introduction of CASS 15. The new regime primarily affects:
- authorised payment institutions
- e-money institutions
- small e-money institutions
- credit unions issuing e-money.
The core objectives of CASS 15 are to align safeguarding standards for these firms with the higher bar already applied to investment business firms; and to provide much-needed clarity and consistency in the process of returning customer funds in the event of a firm’s failure. Historically, inadequate protection of client monies at e-money and payment institutions has been a persistent concern for the regulator. CASS 15 closes that gap.
A central pillar of the new framework is the requirement for an independent annual audit of each firm’s safeguarding systems — bringing the same level of external scrutiny to payment and e-money institutions that has long been standard practice for investment businesses.
This signals the FCA’s intent to treat safeguarding not as a box-ticking exercise, but as a substantive, auditable discipline.
What are the key new requirements?
CASS 15 introduces a suite of significant changes that touch governance, operations, reporting and client fund management. Here’s what firms need to know.
Annual CASS audits by qualified audit firms
Previously, safeguarding audits could be carried out by non-audit firms. Under CASS 15, annual audits must be performed by registered audit firms, raising the bar for the quality and rigour of oversight. Firms that have not safeguarded over £100,000 of relevant funds at any point in the previous 53 weeks are exempt from this requirement.
Monthly regulatory reporting
Firms will be required to report relevant funds to the FCA on a monthly basis, providing the regulator with timely data on the scale and nature of safeguarded funds.
Daily internal reconciliations
Daily reconciliations of relevant funds must be performed, with a clearly documented cut-off time for each reconciliation. This requires firms to upgrade their operational processes and systems to meet the required frequency and accuracy.
Statutory trust for safeguarded funds
Safeguarded funds must now be held under a statutory trust a significant structural change. This provides stronger legal protection for client money in the event of insolvency.
Enhanced governance and recordkeeping
Firms must maintain robust governance frameworks and demonstrate comprehensive recordkeeping aligned with the new requirements.
Wind-down plans
Clear, documented wind-down plans must be in place to ensure the smooth and orderly distribution of relevant funds should a firm fail.
Elimination of segregated fund accounts
Segregated funds are no longer acceptable under the new regime. All relevant funds must be received and held in safeguarded accounts.
How Should Firms Prepare?
With less than two months until the effective date, firms should be taking concrete action now. A phased and structured approach to compliance preparation is strongly recommended.
1. Conduct a gap analysis
An immediate priority should be a thorough gap analysis of your existing systems, controls, and processes against the requirements of CASS 15. This will identify where investment is needed and allow you to prioritise remediation work effectively.
2. Appoint a qualified external auditor
If your firm does not currently use a registered audit firm for its annual safeguarding audit, appointing one should be an early action. Audit findings and any remedial actions will need to be reported to the FCA, so establishing this relationship early is prudent.
3. Update policies and procedures
A comprehensive review and update of internal policies and procedures is required to ensure they reflect the new rules under CASS 15. This is not a light-touch exercise, it will require input from compliance, legal, finance and operations teams.
4. Invest in staff training
All relevant staff must receive adequate training on the new governance and control framework. Training should be documented and tailored to the specific roles individuals play in safeguarding compliance.
5. Develop contingency and wind-down plans
Documentation should be put in place covering the processes to follow in the event of insolvency. A responsible officer should be appointed to oversee contingency planning and act as audit liaison.
Key considerations and wider impact
Beyond the specific compliance requirements, firms should carefully consider the broader operational and cultural implications of CASS 15.
- Increased operational costs: Enhanced compliance obligations will drive up costs across audit, reporting, reconciliation and governance. Budgeting for these increases now will avoid difficult conversations later.
- IT investment: New or upgraded systems will likely be needed to support daily reconciliations, monthly reporting and enhanced recordkeeping. Technology procurement and implementation take time, so this should be scoped early.
- Cultural shift: Moving from a lighter-touch regime to one closely aligned with investment firm standards represents a significant cultural change for many organisations. Senior leadership buy-in is essential.
- Change management: The transition will require structured change management — including process redesign, staff communication and training programmes. The associated costs and time investment should not be underestimated.
The time to act is now
The primary goal of CASS 15 is straightforward: to enhance customer protection by ensuring greater clarity and reducing ambiguity in the process of returning client funds when a firm fails. For accountants and governance professionals advising firms in scope, the message is clear, this is a substantive regulatory change that demands a structured, well-resourced response.
Those charged with governance should prioritise ensuring that robust frameworks are in place to deliver full compliance by 7 May 2026. Waiting is not an option — the gap analyses, system upgrades, policy reviews, auditor appointments and training programmes required will take time to execute well.
If you would like to discuss how CASS 15 affects your firm or clients, please get in touch with the Mercia team.