FCA find e-money and payment services firms need to do more
In June 2025, the Financial Conduct Authority (FCA) published the findings of its multi‑firm review assessing enterprise risk, liquidity management, and wind‑down planning across 14 authorised e‑money and payment institutions. In the FCA’s words, “none of the firms fully met our expectations” and a clear expectation has been set that firms in this sector review and act on the findings.
Key concerns centered on underdeveloped risk frameworks, immature liquidity management, weak group risk considerations, and wind‑down plans that were neither integrated nor operationally robust. Below, we’ve highlighted some of the key findings across the areas of review. If any of these points resonate, we’d encourage firms to take action and improve where necessary.
Risk Management Frameworks
Enterprise-wide Frameworks
Many firms lacked comprehensive enterprise risk frameworks that align with their complexity and scale or were sufficient to support growth.
Inadequate understanding or assessment of risks arising from new activities.
No risk appetite or a risk appetite based solely on judgement rather than quantitatively underpinned (e.g. by stress testing).
No differentiation between capital and liquidity resources.
Limited challenge and scrutiny at operational levels.
Liquidity Risk
No link between the size of credit facilities extended to customers around margin call payments and liquidity stress testing, resulting in underestimating liquidity needs in a crisis.
Relying on existing cash balances to manage a liquidity stress, without considering whether sufficient cash will be available when risks crystalise.
No consideration of reduced market liquidity for safeguarded assets.
Group Risk
Relying on group risk management (such as risk appetite, KRIs and triggers) without verifying the suitability for the individual firm’s specific risks.
Multiple layers of crisis decision-making with unclear delegated authority, slowing decision-making.
Material intra-group dependency for operations without assessing risks of such arrangements on financial and operational resilience.
Wind-Down Planning
Wind‑down planning was treated as an isolated exercise, disconnected from ongoing risk management.
Wind-down triggers that are inconsistent with the risks identified and not quantified according to risk appetite
Insufficient detail, making the plan inoperable
Not analysing how the wind-down timeline can be delayed by issues such as safeguarding, financial crime and contacting customers. For example, not considering meeting obligations to safeguard residual customer funds for 6 years.
Limited financial modelling with no consideration of impact on capital from changes to revenues and costs.
FCA have stated it expects firms to consider the findings of its review and compare against their own arrangements and make any necessary improvements. Importantly, it states it will “continue to engage with the sector” to ensure it has effective risk management and winddown plans in place.
Firms should therefore anticipate engagement with FCA and prepare accordingly. Failure to do so may prompt intensified supervisory intervention or enforcement.
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