Safeguarding Account
A safeguarding account is the account at an eligible institution in which a UK payment or e-money firm places the customer funds it must safeguard, held and designated the way the applicable rules require rather than the way a bank chooses to label its product.
Also called: relevant funds account
In the United Kingdom, an Authorised Payment Institution or Electronic Money Institution that holds customer funds must safeguard them. Safeguarding is the obligation; the safeguarding account is where the money sits when a firm meets that obligation by segregating it. Since 7 May 2026 the FCA’s rules have called it a relevant funds bank account.
What the account has to do
Four features separate it from an ordinary business account. It is held at an approved bank — an authorized credit institution — or at the Bank of England. It is designated in such a way as to show that it is an account held for safeguarding purposes, and the FCA’s guidance is that the word “safeguarding” should appear in the account name wherever possible. It holds only relevant funds, the customer money the regime captures, together with the proceeds of any insurance policy or guarantee, kept apart from the firm’s own cash and reconciled against the firm’s records. And the firm must complete and sign an acknowledgement letter in the FCA’s prescribed template for each such account and send it to the bank.
Segregation into an account is one route to meeting the obligation. The rules also contemplate covering safeguarded funds with an insurance policy or a comparable guarantee. Most firms segregate, because a designated account is far easier to evidence to an auditor and to the regulator than a policy is.
What safeguarding does not do is create a trust. The Court of Appeal has held that the e-money regulations give rise to no statutory trust over relevant funds, and the statutory trust the FCA proposed sits in a post-repeal regime it has decided not to take forward without consulting again.
Where firms get it wrong
Two mistakes recur. The first is treating the bank’s product name as the answer: an account sold as a “client account” or a “segregated account” is not a safeguarding account unless it meets the conditions the regime sets, and an ordinary account is not converted into one by the firm’s intention. The second is assuming a structure imported from another jurisdiction carries across. A US FBO account does not satisfy a UK safeguarding requirement: “for benefit of” is a US banking convention with no UK statutory status, and the label on its own delivers none of the designation, sole-use, acknowledgement-letter or third-party-interest conditions the UK rules impose.
In practice
A safeguarding account is defined by the regime, not by the bank’s product name: it qualifies only if it meets the conditions the rules impose on eligibility, designation, sole use, and the signed acknowledgement letter sent to the bank. The FCA’s CASS 15 requirements have been in force since 7 May 2026, and no statutory trust arises over relevant funds — a point the Court of Appeal settled, and one the FCA has decided not to change without consulting again.
Example
A UK e-money firm collects customer top-ups and places them in a designated account at an eligible credit institution. Nothing of the firm’s own money goes into that account, and the balance is reconciled against the customer ledger. Revenue, salaries and working capital sit in a separate operating account, often at the same bank, and the two are never netted against each other.
Commonly confused with
| Term | How it differs |
|---|---|
| FBO Account | An FBO account is a US banking structure an operator chooses; a safeguarding account is a UK regulatory requirement whose conditions are set by the rules rather than by the firm. |
| Segregated Account | Every safeguarding account is segregated, but segregating an account does not make it a safeguarding account, because eligibility and designation conditions also have to be met. |
| Client Money | Client money is the broad idea of money belonging to customers; UK safeguarding is the specific regime that applies to payment and e-money firms. |
See also
- SafeguardingSafeguarding is the statutory requirement that an authorized payment or e-money firm keep customer funds apart from its own money, by a method the rules prescribe, so the funds are identifiable and returnable to customers if the firm fails. It is a licensing condition, not best practice.
- Relevant FundsRelevant funds are the customer money a UK payment institution or electronic money institution must safeguard: sums received for the execution of a payment transaction, and, for an e-money issuer, funds received in exchange for electronic money issued. Separation from the firm’s own money is immediate on receipt; placing the funds in a designated account comes a day later.
- FBO AccountAn FBO account is a bank account held in one company’s name for the benefit of its underlying customers. The company controls the account; the money inside belongs to the customers. The bank’s relationship is with the account holder, not with them.
- Segregated AccountA segregated account holds customer money apart from the firm’s own money, so the two are never mixed and the customer balance is identifiable as customer balance in both the firm’s and the bank’s records.
- Electronic Money InstitutionA firm authorized in the United Kingdom or in an EU member state to issue electronic money and to provide payment services. The e-money it issues is a claim its holders have against the institution, redeemable at par and expressly not a deposit, which is why the funds behind it must be safeguarded.
Go deeper
Regulatory information checked: 22/Sep/2026