Search CASS 15 and you will find a dozen decent explainers telling you to reconcile daily. Not one tells you what time. That is not sloppy writing. There is no clock time anywhere in the rules, and the deadline that actually binds you sits in a different rule about topping up shortfalls.
UK payment firms that went insolvent between Q1 2018 and Q2 2023 were missing, on average, 65% of their customers' money. The Supplementary Regime came into force on 7 May 2026 to fix that. Four months on, most of what is written about it is still a countdown to a date that has passed.
What Does CASS 15 Actually Require in 2026?
CASS 15 does not replace the statutory duty. Regulation 23 of the Payment Services Regulations 2017 and regulations 20 to 24 of the Electronic Money Regulations 2011 remain the operative obligation, and CASS 15 sits on top. That is why the FCA calls it the Supplementary Regime. Four sourcebooks matter: CASS 15 for the funds, CASS 10A for the resolution pack, SUP 3A for the audit, and SUP 16.14A plus Annex 29BR for the monthly return.
One correction, because several widely-read pages get it wrong: CASS 15 did not introduce a statutory trust. That was the Post-Repeal Regime, consulted on in CP24/20, and it was not made. PS25/12 §2.29 says the FCA is "not proposing to implement the proposals without further consideration and consultation". If a briefing note tells you your customer funds now sit in trust, it has read the consultation and not the policy statement.
When Must a CASS 15 Reconciliation Run Each Day?
Here is the chain nobody writes down.
CASS 15.8.19R requires an internal reconciliation "no less than once each reconciliation day". CASS 15.8.21R then says you must select a reconciliation point, it "must be at the same time(s) for every day", and the reconciliation runs against your records as at that point. The time is yours to choose, and once chosen it is fixed.
Then CASS 15.8.50R: any shortfall must be funded "as soon as possible and, in any case, by the end of the day on which the reconciliation is performed."
Put those together and the reconciliation point is not a free choice. It must sit far enough ahead of your bank's payment cut-off that a break found at the point can still be funded the same day. If your cut-off for a same-day transfer into the safeguarding account is 16:30, a 17:00 reconciliation point is a breach waiting for its first genuine shortfall.
The calendar bends it further. "Reconciliation day" excludes bank holidays "in any part of the United Kingdom" plus, where the reconciliation references a non-UK market, any day that market is closed. Scottish and Northern Irish holidays suppress a reconciliation day, and so does a US market holiday if you hold US-listed assets. Your scheduler needs a composite calendar, not a weekday check.
How Should You Model Relevant Funds in a Payment Ledger?
The most expensive misreading is thinking a ledger flag is segregation. Approach Document 10.39 closes that off: "It would not be sufficient to segregate funds in the institution's books or records; if held electronically, the funds must be held in a separate account at a third party account provider."
The rules also force two distinct pending states, and conflating them produces a real shortfall:
- Unallocated relevant funds (CASS 15.2.5R): relevant funds whose owner you have not yet determined. Allocate by the end of the business day following receipt. These do count into the requirement under 15.8.30R(2).
- Unidentified relevant funds (CASS 15.2.9R): funds you cannot yet classify as relevant at all. These sit outside the requirement until identified, with no outer time limit in the rules, which is worth an internal SLA of your own.
That flooring rule catches people. A client in debit does not net against one in credit. If a balance goes to −£4,000 through a fee or a failed collection, the requirement treats that client as zero rather than dropping by £4,000. Net across the book and you will under-fund.
The D+1 comparison (CASS 15.8.35R) tests its requirement against items A and C only; B and D do not count. And CASS 15.8.51R(2) is explicit: if you cannot cure a D+1 shortfall with relevant funds you must use your own money "even if this leads to a discrepancy between its safeguarding requirement and safeguarding resource". The rules deliberately create a state where resource exceeds requirement because they told you to over-fund. Model that overlay as a reversible position, not an unexplained break.
What Happens to In-Flight Payments at the Reconciliation Cut-Off?
This is the question every real implementation hits in week one, and the regulator declined to answer it.
PS25/12 §5.16 records the industry asking when the safeguarding obligation ends for a card payment. Some firms said authorisation. Some said when funds reach the scheme. Some said when the merchant's acquirer is estimated to have received them. The FCA's response, in full: "We will consider this feedback if and when we progress the implementation of the Post-Repeal Regime."
That regime has no date, so this is indefinite. Search CASS 15 and chapter 10 of the Approach Document for "acquirer" or "merchant" and you get nothing.
What you do have is Approach Document 10.34: safeguarding continues "until funds are paid out to the payee or the payee's PSP". Read alongside CASS 15.8.33R, which permits a deduction only where "the funds have been paid to the payee or the payee's payment service provider", the conservative reading is that neither authorisation nor capture is release.
CASS 15.8.40G(2) says third-party records "should, so far as possible, relate to the same point in time" as your reconciliation point, and where they cannot, your CASS 15.8.1R policy "should set out how" you still achieve the purpose. That is the FCA handing the timing problem back to you in writing. CASS 15.8.56R then excuses discrepancies arising "solely as a result of timing differences between the accounting systems", which is your escape hatch, but only if the policy defined that difference in advance.
My reading, and it is a reading rather than a rule: keep the payment in the requirement until you have confirmation it reached the payee's PSP, and write that state machine into the policy. Over-safeguarding costs liquidity. Under-safeguarding is a shortfall you must fund by end of day and disclose on the return.
Segregation vs the Insurance Method: Which Should You Choose?
CASS 15.5 survives intact, and the trade-off is sharper than most summaries suggest.
Segregation means daily internal and external reconciliations, acknowledgement letters per account, approved-bank due diligence and the whole scheduling problem above. The insurance or comparable guarantee method replaces the funds with cover, and where that cover is unlimited, CASS 15.8.11R removes the internal reconciliation entirely. You still calculate the requirement daily, but the reconciliation against segregated balances goes away.
The catch is the terms. CASS 15.5.5G requires "no level below which the insurance policy or guarantee does not pay out", so no deductible, and it must pay regardless of your own fraud or negligence. No insurer prices that cheaply. CASS 15.5.16G states the endgame plainly: if cover lapses and you cannot segregate in time, consider placing yourself into administration while it is still live.
Segregation is usually cheaper, and insurance is a bridge. Build the reconciliation stack either way: the fallback plan the rules require assumes you can switch to segregation on three months' notice.
Why Is There No Statutory Trust After Ipagoo?
Re Ipagoo LLP [2022] EWCA Civ 302 held that the EMRs create no statutory trust, only a priority interest, with any shortfall topped up from the general estate. Re Allied Wallet [2022] EWHC 1877 (Ch) extended that to the PSRs. The relationship is debtor and creditor, not fiduciary. The Post-Repeal Regime would have imposed a trust and replaced that top-up with ordinary tracing. It was dropped.My prediction, marked as opinion: it does not come back in that form. The FCA's own cost-benefit analysis put the end state at £40.7m of costs against £13.3m of benefits, a net loss of £27.3m, against the interim regime's net gain of £71.9m. PS25/12 §7.1 ties timing to the Treasury revoking the PSRs and EMRs. A value-destroying proposal that waits on someone else's legislative timetable, parked pending a review that cannot begin until a full audit cycle completes around mid-2027, has no momentum. Build for the regime that exists.
What Actually Causes Safeguarding Discrepancies?
No ranking page enumerates these. From the rules themselves: unallocated receipts not yet assigned to a client; FX revaluation, since CASS 15.3.3R requires a multi-currency pool topped up each reconciliation day at the previous day's closing spot rate; fee accrual timing under 15.8.33R(2)(c); negative balances floored at zero; chargebacks arriving after the reconciliation point; drift between a provider's API balance and its statement; and duplicate payments.
That last one is not theoretical. Supercapital Ltd entered administration in September 2019 holding roughly £12.6m with a shortfall around £585,000, reportedly caused largely by unrecovered duplicate payments that a daily reconciliation would have caught. Those figures come from adviser accounts rather than an FCA notice, so treat them as indicative. The failure mode is the point: a job you did not run.
Premier FX shows where that ends. The FCA's 2021 final notice records that none of the 73 UK accounts the firm held were designated as safeguarding accounts, and that it sought acknowledgement letters on none of 70 of them. Claims reached £9,202,400.77 and the liquidator distributed 9p in the pound.
Can You Generate the Monthly Return From a Month-End Snapshot?
No, and this is the strongest argument in the regime for an append-only reconciliation store.
The safeguarding return under SUP 16.14A.3R is due within 15 business days of each calendar month end. SUP 16 Annex 29BR runs to 56 questions, with 31 to 56 mirroring 1 to 30 for firms running a separate unrelated-payment-services pool. The FCA's firms page calls the form REP027.
Three field groups make a snapshot useless. Q9 and Q10 ask for the highest and lowest safeguarding requirement during the period. Q20 asks for the excess or shortfall at period end before any correction, and Q21 separately for what you did about it, so the pre-remediation state must survive remediation. Q22 to Q25 repeat all four for D+1. Q28 wants an account movement table including how many accounts an acknowledgement letter covers, and an explanation of any difference.
Pair that with CASS 15.8.9R, which requires the time, date, actions and calculation outcomes of every reconciliation, and CASS 15.8.8R(3), which runs the five-year retention clock from the date a record was most recently modified. An in-place update restarts that clock and destroys the prior state. Append-only versioned rows are the only defensible position here.
The resolution pack tightens this further. CASS 10A.1.9E requires the most recent internal and external reconciliation records to be retrievable immediately, not within the 48 hours CASS 10A.1.7R allows for everything else, from systems that "remain operational and accessible to it after its insolvency".
What This Means for UK Payment Engineers
Concrete steps, in the order I would do them:
1. Derive the reconciliation point backwards. Take your bank's same-day cut-off, subtract the time to investigate a break and get approval, and set the point there. Write it into the CASS 15.8.1R policy, because 15.8.21R fixes it.
2. Build a composite reconciliation-day calendar. England, Scotland and Northern Ireland bank holidays, plus the trading calendar of any market your relevant assets sit in.
3. Make unallocated and unidentified separate states with different requirement treatment, floor individual balances at zero, and test both with a client in debit.
4. Decide the in-flight question yourself and document it. The FCA deferred it; your policy is the only place it gets answered.
5. Store every reconciliation run append-only, with pre- and post-remediation state, because Q9, Q10, Q20 and Q21 cannot be reconstructed otherwise.
6. Check your acknowledgement letters. CASS 15 sets no deadline for getting a countersigned letter back and no consequence if it never returns. The only pressure is Q28 forcing you to disclose and explain the gap.
The audit lands next, and SUP 3A.9.12R requires the auditor to identify each individual rule breached, with no materiality threshold. When the FRC standard arrived in the mainstream CASS world in 2016, adverse opinions jumped to 13% before settling at 6% by 2024. Expect the same shape here, and expect the first cycle to be the ugly one.
The same discipline shows up in Verification of Payee and Variable Recurring Payments; my earlier piece on what changed on 7 May covers the transition itself. More of my work is at Tom Wang.
The rules give you a fixed daily point, a same-day funding deadline and a return you cannot fake from a snapshot. Everything else is your design decision, written down before an auditor asks.