Use of payments firms has grown in recent years, but the FCA says it continues to see poor safeguarding practices. Funds held by payments and e-money firms are not directly protected by the Financial Services Compensation Scheme. Instead, companies must safeguard funds which can mean customers lose money or experience delays to returns if the firm fails. Last year, the watchdog wrote to nearly 300 payment companies warning that it was unhappy with safeguarding and wind-down arrangements within the sector. It has since opened supervisory cases relating to approximately 15% of firms that safeguard. Now it is planning new rules that would see the existing e-money safeguarding regime replaced with a client assets (Cass) style system where relevant funds and assets are held on trust for consumers. Firms have until 17 December to respond to a consultation. Matthew Long, director, payments and digital assets, FCA, says: "We’re consulting on proposals to make safeguarding rules stronger and clearer for payment and e-money firms so customers get as much of their money back as quickly as possible if the firm goes out of business."