How to use this checklist: Work through each section before an internal review or ahead of your annual safeguarding audit. Auditors will request evidence across all five areas — gaps in reconciliation records or missing bank acknowledgement letters are the most common findings. Section 5 (wind-down planning) is frequently incomplete even at well-run firms; address it early.
1. Relevant Funds Calculation
- Relevant funds definedConfirmed which customer funds are in-scope under PSR 2017 or EMReg 2011 — legal analysis documented and signed off.
- Daily relevant funds calculationMethodology documented and reviewed against current FCA guidance — calculation is consistent and repeatable.
- Calculation testedEnd-to-end relevant funds calculation verified by a second person for accuracy — test results retained.
- Historical recordsDaily relevant funds calculations retained for at least five years — storage location accessible and indexed.
- Fund flow mappingAll routes through which relevant funds pass are documented — from receipt to safeguarding account placement.
- Exceptions logAny days where safeguarding was inadequate documented with root cause analysis and evidence of remediation.
2. Safeguarding Account Documentation
- Safeguarding bank(s) confirmed as FCA-authorised credit institutionsEach safeguarding bank verified against the FCA register — confirmation retained on file.
- Acknowledgement letter received from each safeguarding bankCurrent, signed acknowledgement letter filed for every safeguarding account — check expiry or review dates.
- Account naming conventionSafeguarding accounts clearly identified in bank records — naming evidences their designated safeguarding purpose.
- Sole useConfirmed no business funds co-mingled in safeguarding accounts at any point during the audit period.
- Dormant accountsAny unused safeguarding accounts closed or confirmed in writing as no longer holding relevant funds.
3. Daily Reconciliation Records
- Reconciliation performed every business dayProcess and frequency documented — evidence of daily execution for the full audit period available.
- Three-way reconciliationRelevant funds obligation, bank balance, and internal ledger records all reconciled — differences investigated and resolved.
- Timing differencesAny lag between the obligation arising and funds being placed in the safeguarding account documented with controls in place.
- Reconciliation sign-offNamed person approves each daily reconciliation — approval evidenced in the record, not retroactively applied.
- System outputReconciliation generated from the system of record — not a standalone manual spreadsheet without system linkage.
4. Audit Evidence Pack
- Sample of daily reconciliations for the audit periodRepresentative sample selected and pulled — covering start, mid-period, and end of the audit window at minimum.
- Bank statements for safeguarding accountsFull bank statements for all safeguarding accounts covering the entire audit period.
- Board minutes approving the safeguarding methodologyMinutes documenting board approval of the methodology and any changes made during the audit period.
- Safeguarding policy documentCurrent version with date of last review — confirms the policy was in force throughout the audit period.
- Staff training recordsEvidence that all relevant staff have been trained on safeguarding obligations — completion dates recorded.
5. Wind-Down Planning
- Wind-down plan preparedDocumented plan for how relevant funds would be returned to customers on cessation of business — practical and operationally credible.
- Resolution packAll safeguarding account details, bank contacts, and reconciliation files in an accessible, stand-alone format.
- Insolvency practitioner briefingAuditors or advisers are familiar with the special administration regime for payment institutions and EMIs.
- Board approvalWind-down plan formally approved by the board and subject to annual review — approval minuted.
