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.
Why the protections should not be described as interchangeable
| 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.
