If you run, or advise, a UK-authorised payment institution, e-money institution, or crypto firm, you have almost certainly heard the word “CASS” thrown around by auditors, banking partners, or the FCA itself. For firms that grew up outside the traditional investment world, it can be confusing: CASS wasn’t originally written with you in mind, yet from 7 May 2026 a CASS-style regime applies directly to you. This post sets out what CASS actually is, how it differs from the safeguarding rules you already know, and why getting this right is one of the highest-stakes compliance areas a smaller regulated firm faces.

What CASS Actually Is

CASS is the FCA’s Client Assets Sourcebook — the part of the Handbook that governs how firms hold and protect money and assets that belong to their clients, not to the firm itself. It was built primarily for investment firms, brokers, and asset managers: CASS 6 covers custody assets, CASS 7 covers client money, and CASS 8 covers mandates. The underlying idea is simple and old: if a firm is holding your money on your behalf, that money should be kept separate from the firm’s own money, accurately recorded, and readily returnable — including, critically, if the firm fails.

Payment institutions and e-money institutions have never technically been “CASS firms” in this sense. Instead, you safeguard customer funds under a different, parallel framework: regulation 23 of the Payment Services Regulations 2017 for payment institutions, and regulation 20 of the Electronic Money Regulations 2011 for e-money institutions. The safeguarding obligation is conceptually similar to CASS — keep relevant funds segregated, or cover them with insurance or a comparable guarantee — but the rules have historically been much shorter, less prescriptive, and, as one landmark case showed, legally weaker than they looked.

Why It Matters: A Case Study

The clearest illustration of why this distinction matters is the collapse of Ipagoo LLP, an e-money institution that entered special administration in 2019. When the administrators sought directions on how to distribute the safeguarded funds, the case went all the way to the Court of Appeal. In Re Ipagoo LLP [2022] EWCA Civ 302, the court confirmed that the Electronic Money Regulations 2011 do not create a statutory trust over safeguarded funds in the way CASS 7 does for client money. In practical terms, e-money holders did not automatically have the same proprietary claim that a CASS client would have — a gap that added complexity, delay, and cost to the return of customer funds.

That case, along with a string of payment and e-money firm failures where customers waited months or longer to get their money back, is a large part of why the FCA moved to overhaul the regime.

What’s Changing

In August 2025 the FCA published PS25/12, finalising a new CASS 15 chapter of the Handbook specifically for payment institutions, e-money institutions, and credit unions issuing e-money. From 7 May 2026, these firms move onto a regime that looks much more like the client money rules investment firms have followed for years: a written safeguarding policy, more frequent and more rigorous internal and external reconciliations, clearer rules on segregation and same-day safeguarding, a resolution pack setting out how funds would be returned on failure, and stronger governance and oversight expectations at board level. The direction of travel is unmistakable: the FCA wants payment and e-money customers to get the same practical outcome as investment clients if their provider fails — their money back, quickly and in full — rather than relying on a weaker underlying legal protection and hoping an insolvency process sorts it out.

The same logic is now extending into crypto. The FCA’s 2026 crypto safeguarding rules (CASS 17) apply comparable segregation and custody principles to cryptoasset firms ahead of the full crypto regime commencing in 2027.

What This Means for Your Firm

For smaller and mid-sized firms, this is not a paperwork exercise. It touches your banking relationships, your reconciliation processes and systems, your governance arrangements, and — under the new regime — potentially the personal accountability of your safeguarding officer under the Senior Managers regime. Firms that treat CASS 15 as a rules-compliance checklist tend to find gaps only when an auditor or the FCA finds them first; firms that build genuine oversight tend to find CASS 15 is achievable without disrupting the business.

Over the coming weeks this site will work through the practical detail — reconciliations, resolution packs, the statutory trust, and more — one topic at a time. If your firm needs help assessing where it stands against CASS 15 or the wider safeguarding regime, get in touch for a review.