Safeguarded funds are customer funds protected under a regulatory safeguarding arrangement that separates or otherwise secures them from a payment institution’s operating money. The structure is intended to protect relevant funds if the institution becomes insolvent. Safeguarding is not automatically the same as a bank deposit guarantee.
How safeguarding can work
Rules vary by jurisdiction. A payment or e-money firm may place relevant funds in a designated account, use approved secure assets, or use an eligible insurance or guarantee arrangement. Reconciliation and recordkeeping are central because the firm must identify the protected amount.
| Area | Safeguarding | Deposit insurance |
|---|---|---|
| Purpose | Protect relevant customer funds under payment or e-money rules | Protect eligible deposits under a statutory scheme |
| Provider type | Often payment or e-money institution | Bank or covered deposit taker |
| Coverage and process | Depends on entity, funds and jurisdiction | Depends on scheme limits and eligibility |
| Customer claim | May involve insolvency distribution | Governed by the deposit scheme |
What should a business ask?
- Which legal entity receives the funds?
- Which jurisdiction and safeguarding rules apply?
- When does safeguarding begin and end?
- Are the funds deposits, e-money or payment funds?
- What insolvency and recovery process is described?
The UK Financial Conduct Authority explains that safeguarding requires payment and e-money firms in scope to protect customer funds in the event of insolvency. Source: FCA safeguarding requirements, updated May 2026.
Confirm the applicable structure for any Quotable Currency Account during onboarding.
