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Safeguarding Audits

Authorised Payment Institutions (APIs) and Electronic Money Institutions (EMIs) are required to safeguard relevant funds and are expected to undertake an annual audit of compliance with the safeguarding requirements.
What is a safeguarding audit?

What is a safeguarding audit?

The Payment Services Regulations 2017 (PSRs) and Electronic Money Regulations 2011 (EMRs) state that all APIs and EMIs must safeguard relevant funds, as soon as they are responsible for them. 

If a payments/e-money firm holds relevant funds, it must maintain organisational arrangements sufficient to minimise the risk of loss or diminution of these funds and ensure it has in place adequate internal controls, risk management processes and accounting procedures to support this, among other things. In line with its statutory objective to protect customers, the Financial Conduct Authority (FCA) currently expects these firms to undertake an annual audit of compliance with the safeguarding requirements. 

Meet the safeguarding audit team

Jonathan West

+44 (0)20 7556 1200
westj@buzzacott.co.uk
LinkedIn

Jay Patel

+44 (0) 207 556 1390
patelj@buzzacott.co.uk
LinkedIn

Jacob Cutts

+44 (0)20 3972 6596
cuttsj@buzzacott.co.uk
LinkedIn

What is a safeguarding audit?

The Payment Services Regulations 2017 (PSRs) and Electronic Money Regulations 2011 (EMRs) state that all APIs and EMIs must safeguard relevant funds, as soon as they are responsible for them. 

If a payments/e-money firm holds relevant funds, it must maintain organisational arrangements sufficient to minimise the risk of loss or diminution of these funds and ensure it has in place adequate internal controls, risk management processes and accounting procedures to support this, among other things. In line with its statutory objective to protect customers, the Financial Conduct Authority (FCA) currently expects these firms to undertake an annual audit of compliance with the safeguarding requirements. 

Our service

Our service

In performing a safeguarding audit, we will review a firm's internal policies, procedures, records, and processes to assess whether these are sufficient to ensure that relevant funds are being safeguarded appropriately.

What the auditor opines on

  • Whether the institution has maintained systems adequate to comply with the applicable safeguarding requirements; and 
  • Whether the firm was in compliance with those requirements at the end of the audit period.

Firms will no doubt be aware that the FCA consulted on the safeguarding regime (see our summary here). Our service will evolve in line with policy updates as they are issued, ensuring you can trust that we will always help you to fulfil your audit obligations.

Frequently asked questions

Frequently asked questions about safeguarding audits

FAQ's

What did the FCA consult on?

The FCA recently consulted (in CP24/20) on the safeguarding regime as a whole, including audit arrangements. A proposal put forward by the FCA was ultimately to bring safeguarding requirements into the CASS rules, as CASS 15. Please click the following link for our summary of the consultation. 

read more

What are the changes proposed to the audit regime?

Please click the following link to see a table summarising the key differences between current expectations and the proposed interim rules with respect to safeguarding audits.

read more

Are safeguarding audits and CASS audits similar, and will this benefit me?

Yes. The fundamental principle to protect client funds is the basis of each set of requirements. The procedures followed in each type of audit are designed to check whether a firm is following this fundamental principle. Bringing the safeguarding requirements into a CASS chapter will enable auditors to streamline their approach and to more efficiently leverage expertise gained on other CASS audit engagements. 

Get in touch

Get in touch

If you’re a payments or e-money firm in need of a safeguarding audit now or would like to discuss your future needs, simply fill out the form below and one of our experts will be in touch.

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