May 18, 2021

EMI Safeguarding requirements

The FCA have today written a Dear CEO letter to e-money firms asking them to make their customers aware of the protections they have in place.

Some e-money customers may not understand how their money is protected and the difference compared to using other firms such as banks - in particular that Financial Services Compensation Scheme (FSCS) protection does not apply.

The FCA are concerned that many e-money firms compare their services to traditional bank accounts but do not adequately disclose the differences in protections between e-money accounts and bank accounts. It is expected that firms communicate with customers in a way which is clear, fair and not misleading and to provide enough information to enable them to take informed decisions about how their money is protected.

In the letter the FCA have outlined three key actions firms should take:

1. write to their customers within six weeks to remind them of how their money is protected through safeguarding and that FSCS protection does not apply

2. review their financial promotions to ensure they give customers adequate information and make clear any matters that are not regulated by the FCA

3. draw this letter to the attention of their Board.

The FCA have indicated that there will be follow up to assess activity and action taken by firms.