Relevant Funds

“Relevant funds” is the term the UK payment services and e-money regulations use for the money a firm has to keep apart from its own. For payment services it is sums received from, or for the benefit of, a payment service user for the execution of a payment transaction, and sums received from another payment service provider for a transaction carried out on a user’s behalf; where a payment is only partly for a payment transaction, the firm safeguards a reasonably estimated representative portion of it. For an e-money issuer it is funds received in exchange for electronic money that has been issued.

Timing is the hard part

There are two clocks, and compressing them into one is where firms go wrong. Separating relevant funds from the firm’s own money is immediate on receipt. Placing them in a designated safeguarding account with an authorized credit institution or the Bank of England, or in secure liquid low-risk assets with an authorized custodian, is required only where the firm still holds them at the end of the business day following the day it received them. E-money carries a further rule of its own: funds received by payment instrument need not be safeguarded until they are credited to the institution’s payment account or otherwise made available to it, and in any event no later than the end of five business days after the e-money was issued. Where money arrives through an agent or a distributor, the FCA’s position is that it must be safeguarded from the moment the agent or distributor receives it, and the obligation stays with the institution.

Money that is not relevant funds — the firm’s own fee income once properly earned and extracted, or money held for a service that is not a payment service — falls outside the obligation. Firms that mix flows through shared accounts therefore need a reconciliation capable of telling one from the other at any moment, because the regulator’s question is what the position was on a given day, not what it was at month end. Since May 2026 the FCA’s rules have put a deadline on that too: each receipt must be allocated to an individual client no later than the end of the business day following receipt, with anything not yet allocated recorded as unallocated relevant funds, and internal and external reconciliations performed on every reconciliation day. Relevant funds are not “client money”, which is a different set of FCA rules, and they are not held on trust.