Payment firms: Wind-down and resolution planning – from theory to operational reality

Several high-profile payment and e-money institution failures over the past few years have left customers waiting months, sometimes years, to get their own money back. In most cases, recovery rates are well short of 100%. For example, the latest available figures from the FCA have shown that payment and e-money firms that became insolvent between Q1 2018 and Q2 2023 had an average shortfall of 65% in the funds owed to their customers. 

The common thread isn't fraud or market shock. It's firms that didn't know, in the moment it mattered most, exactly whose money they were holding, where it sat and how to give it back.

The FCA's response is the new Safeguarding Supplementary Regime, confirmed in Policy Statement PS25/12 which came into force on 7 May 2026. At its heart is a requirement (detailed in FCA’s CASS 10A) that is new to most payment and e-money firms but long overdue: a resolution pack, kept current, that gives an insolvency practitioner immediate access to the information needed to identify and return customer funds.

What's actually changed

From May 2026, FCA authorised payment and e-money institutions must adhere to the new Supplementary Regime, and comply with requirements including daily safeguarding reconciliations, mandatory monthly returns to the FCA and annual external audits of their safeguarding arrangements. 

As part of the Supplementary Regime, the FCA has added a new chapter (CASS 10A), formalising the resolution pack requirement: a requirement for each firm to maintain a detailed resolution pack to support the timely return of customer funds in the event of an insolvency. This needs to be a living set of documents covering safeguarded fund records, account structures, third-party arrangements, key personnel and reconciliation data, maintained so it's ready to use, not complied retrospectively when a firm is already in trouble.

The direction of travel is clear. The FCA has been explicit that it wants to see fewer shortfalls, fewer supervisory findings of inadequate safeguarding and better customer outcomes in the form of robust customer (“relevant funds”) protections.

The Supplementary Regime is only the first stage of reform, an interim step before the FCA’s expected second stage of reform - the Post-Repeal Safeguarding Regime, which could see a more fundamental shift towards a statutory trust-based regime for customer funds. The FCA’s next step here is likely to be significantly informed by its enhanced supervision and oversight through annual safeguarding audits and monthly regulatory returns.

Why firms have failed and why it keeps happening

Recent payment and e-money institution failures in the UK have primarily stemmed from some combination of poor management of customer funds, inadequate financial crime controls or weak business planning. 

In such a fast-moving sector, growth has often outpaced infrastructure and risk management frameworks. The potential implications across the industry are significant and growing. FCA figures show that the amount of relevant funds safeguarded by e-money institutions in the UK was £26 billion in 2024, up from £11 billion in 2021. 

Many payment and e-money institutions have scaled transaction volumes and customer numbers far faster than they've scaled their finance, reconciliation and governance functions. A safeguarding model built for a £10 million book doesn't necessarily hold up robustly at £500 million, and few firms have adequately stress-tested that transition before it's forced on them by an insolvency practitioner.

Why a properly developed resolution pack and wind-down plan matters

A resolution pack now tells you where the money is and who it belongs to. Meanwhile, the wind-down plan is a long-standing regulatory requirement for all FCA payment firms and tells you how to effect the wind-down process including the return of customer funds.

Together, these documents are the difference between an orderly wind-down, where customers get their money back in a timely manner, and a disorderly one, where an insolvency practitioner spends months piecing together fragmented records while professional costs erode the very funds customers are entitled to. Both documents are likely to be areas of focus as part of the FCA’s supervision of payment firms, especially for those businesses with indicators of financial strain or wider non-compliance.

Done well, these documents give a firm's board and senior managers genuine line of sight over their own resilience: clear trigger points for when wind-down conversations need to start, how customer funds would be returned, a realistic view of the costs involved and how they'd be funded, and confidence that the people who'd need to execute the plan actually understand the practical realities of such a scenario.

Done badly, it's a regulatory exposure and vulnerability that only becomes visible at the worst possible moment.

Where firms typically fall short

In our experience, three areas are consistently under-developed when it comes to returning customer funds:

• The safeguarding-to-resolution pack and wind-down plan link: firms maintain reconciliations and a wind-down plan as separate exercises, when the whole point of the new regime is that they need to work as one integral, connected system.
• Cost realism: wind-down cost estimates are often desk-top exercises rather than grounded in what it would genuinely cost to retain staff, run systems and communicate with customers for the months or years needed to return funds and wind-down operations.
• Governance and ownership: too many plans sit narrowly with the Risk & Compliance function (in terms of their origination, development and approval), with no clear and common understanding of the operational responsibilities for executing the wind-down.

How Grant Thornton can help

We work with payment and e-money institutions on exactly this intersection of regulatory compliance and operational reality. This includes live simulations, gap analyses against the new CASS 10A and Supplementary Regime requirements, building or stress-testing resolution packs and wind-down plans so they hold up under real scrutiny, and advising on the implementation of the wider safeguarding requirements post-May 2026 (CASS 15). 

We also bring insolvency and restructuring expertise to the table, informed by what actually happens when these plans are tested in practice, not just what the rulebook strictly requires.

Firms that treat the resolution pack and wind-down planning as a genuine resilience exercise and get them working as one system, tested rather than merely documented, will be in a materially stronger position when the FCA next comes calling, or when a stress event forces the question.

For more information, contact Jarred Erceg, or Paul Staples.