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What are the non-bank PSP safeguarding requirements and accounts?

Non-bank Payment Service Providers (<a href="/glossarycollection/payment-service-provider" style="color:#48277C;" target="_blank" title="Payment Service Provider"><u>PSP</u></a>) are required to safeguard any ‘relevant funds’ in accordance with the Payment Services Regulations 2017 (<a href="/glossarycollection/payment-services-regulations" style="color:#48277C;" target="_blank" title="Payment Service Regulations"><u>PSR</u></a>). Legislation allows for this to be done in a number of ways, including by placing the funds in an account with an authorised credit institution or the Bank of England. Relevant funds safeguarded in this way must be segregated from any ‘own funds’ the firm possesses.<br/><br/>

The Bank and payment schemes have designed account arrangements which allow non-bank PSPs to meet these safeguarding requirements, though responsibility for ensuring that ‘client funds’ (i.e. ‘relevant funds’) are adequately safeguarded, and all relevant regulations are complied with, remains with the non-bank PSP. Non-bank PSPs can choose to operate using ‘client funds’ or ‘own funds’. Some non-bank PSPs may choose to offer both, but importantly the funds cannot be comingled, as per the legislative framework.<br/><br/>

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