Daily Safeguarding Reconciliations Under CASS 15: A Practical Guide
Last reviewed: July 2026
Quick answer: CASS 15 requires payment and e-money firms to run two distinct reconciliations — internal and external — on every reconciliation day, comparing what the firm should be safeguarding against what it actually holds. Any shortfall must be corrected from the firm’s own funds by the end of the day it’s identified. This is the operational core of the new regime, and the area the FCA has consistently found firms least prepared for.
This is the third piece in our CASS 15 series. Start with CASS 15 and the Safeguarding Supplementary Regime for the full picture, or see our guide to the CASS 10A Resolution Pack.
Why reconciliation is the control that matters most
Every other CASS 15 requirement — the resolution pack, the monthly returns, the annual audit — exists to evidence that safeguarding is actually working. Reconciliation is the mechanism that makes it work. It’s the daily check that customer funds held are what they should be, and it’s the control the FCA has repeatedly found firms getting wrong in practice: policies that look sound on paper, running on processes that don’t actually operate as intended day to day.
Get reconciliation wrong and every other document in your compliance file — including your resolution pack — is only as good as the numbers underneath it.
The two reconciliations you need to run
CASS 15 requires firms to perform internal and external safeguarding reconciliations separately. They answer different questions and both are mandatory.
Internal safeguarding reconciliation
This compares your safeguarding requirement (what you should be holding for customers) against your safeguarding resource (what your internal records show you’re actually holding).
Critically, the requirement isn’t a top-down estimate — it has to be built from the ground up. Under CASS 15.8.31R, firms must calculate an individual safeguarding balance for each customer, capturing the full amount owed to them. You have some flexibility in how you group these balances (one aggregated figure per customer, or split by product/service), but no flexibility on the outcome: the reconciliation must always be able to show the full amount owed, and to whom, at an individual level.
External safeguarding reconciliation
This compares your internal records against external statements from the banks, custodians, or other institutions actually holding the relevant funds. It’s the check that what your books say should be there is confirmed by an independent third-party record, not just your own systems.
Internal deposit reconciliation (where relevant)
If your firm holds relevant funds somewhere other than a dedicated safeguarding account, you need an additional internal reconciliation on top of the two above — checking that the relevant funds deposit resource (what’s actually in relevant funds bank accounts) matches the relevant funds deposit requirement (what should be there).
One narrow exception: firms relying solely on the insurance or guarantee safeguarding method, where the policy or guarantee is unlimited in cover, don’t need to run an internal safeguarding reconciliation — but they still must calculate their safeguarding requirement daily.
Cadence: what “daily” actually means
Reconciliations must be run each reconciliation day, which excludes weekends, UK bank holidays, and relevant foreign market closures — it isn’t strictly every calendar day, but it is every business day your firm is operating.
Two operational points matter beyond just frequency:
- Consistent timing. Run reconciliations at a fixed, documented point each reconciliation day. Firms that let the timing drift make it harder to explain discrepancies and harder to demonstrate a controlled process to an auditor.
- Aligned cut-off points. Internal and external reconciliations should be aligned to the same point in time where possible, to avoid timing mismatches that look like discrepancies but are really just an artefact of comparing two snapshots taken at different moments.
Handling shortfalls and discrepancies
This is where CASS 15 is unambiguous, and where firms carry the most direct financial exposure:
- Shortfalls must be corrected same-day. If the resource is less than the requirement, the firm must pay the shortfall into a relevant funds bank account, or invest it in relevant assets, by the end of the day the reconciliation is performed — using the firm’s own money.
- Excess must be withdrawn. If more is held than required, the surplus must be withdrawn from the relevant account.
- Discrepancies must be investigated without undue delay, with the firm identifying the root cause — not just correcting the number and moving on. Where a discrepancy stems from a breach of the safeguarding requirements, firms are expected to take steps to prevent it recurring, not just remediate the individual instance.
- The discrepancy is resolved by subsequent reconciliations, even where topping up a shortfall temporarily creates a surplus elsewhere — the same-day correction takes priority over a perfectly netted position.
Non-standard reconciliation methods
The FCA sets out standard methods for reconciliation, but permits firms to use a non-standard method instead — provided it’s fully documented and independently assured by an auditor. In practice, this means:
- Firms can’t simply design their own reconciliation approach and self-certify it as adequate.
- Any non-standard method needs a written rationale explaining why it meets the same protective outcome as the standard approach.
- It must be disclosed in monthly regulatory returns, so the FCA has ongoing visibility of which firms are operating outside the standard model.
If you’re considering a non-standard method — often driven by a particular product structure or banking arrangement — build in time for independent auditor sign-off before relying on it operationally.
FCA notification triggers
Firms must proactively notify the FCA if, at any point in the preceding 12 months:
- The amount of relevant funds actually safeguarded was materially different from the total amount required under the safeguarding rules, or
- Internal records and accounts of relevant funds were materially out of date, inaccurate, or invalid.
This is a rolling look-back obligation, not a point-in-time check — firms need a process that would catch and flag this even if the underlying issue happened several months earlier and has since been fixed.
Governance: who owns this
The FCA expects safeguarding oversight to sit clearly with a designated senior manager, not to be diffused across an operations team with no single accountable owner. In practice, firms are expected to:
- Assign a named safeguarding owner with defined responsibilities
- Provide routine safeguarding management information to the board or equivalent governing body
- Maintain evidence of review, challenge, and escalation — not just evidence that reconciliations happened, but evidence someone senior was actually looking at the results
- Keep governance maps, role descriptions, and escalation frameworks current
Common pitfalls
- Manual, spreadsheet-based reconciliation at scale. For most firms, manual processes are no longer sufficient to meet daily cadence, accuracy, and evidencing requirements simultaneously — this is the single biggest driver of firms moving to automated reconciliation tooling.
- Treating internal and external reconciliation as one combined check. They’re separate requirements with separate evidentiary trails; conflating them creates gaps an auditor will find quickly.
- No documented rationale for non-standard methods. Using a bespoke approach without a clear, auditor-assured written justification is one of the more common findings in early CASS 15 reviews.
- Discrepancy correction without root-cause investigation. Topping up a shortfall same-day satisfies the immediate rule; it doesn’t satisfy the requirement to understand and prevent recurrence.
- No senior ownership. Reconciliation sitting entirely within an operational team, with no board-level visibility, doesn’t meet the FCA’s governance expectations even if the numbers themselves are accurate.
Frequently asked questions
Do we need to reconcile every single calendar day? No — reconciliation is required each reconciliation day, which excludes weekends, UK bank holidays, and relevant foreign market closures. It does need to happen every day your firm is operating.
What’s the difference between “requirement” and “resource”? Requirement is what you should be safeguarding for customers, built from individual customer balances. Resource is what you’re actually holding. Reconciliation is the process of checking one against the other.
Can we use our own reconciliation method instead of the FCA’s standard approach? Yes, but only if it’s fully documented and independently assured by an auditor, and disclosed in your monthly returns. It isn’t a decision you can make and implement unilaterally.
What happens if we find a shortfall? It must be corrected the same day, using the firm’s own funds, and the underlying cause investigated without undue delay — not just the number corrected.
Does this apply if we use an insurance or guarantee safeguarding method? Largely yes, except firms relying solely on an insurance policy or guarantee with unlimited cover are exempt from the internal safeguarding reconciliation specifically — though a daily requirement calculation is still needed.
How we can help
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This page is for general information only and does not constitute regulatory or legal advice. Firms should refer to CASS 15.8 in the FCA Handbook directly and seek advice specific to their circumstances.