Wind-Down Planning for Payment Institutions

Wind-down planning for payment institutions is a critical regulatory requirement under the FCA's expectations. It involves the preparation of a structured plan to ensure an orderly cessation of business activities without causing harm to consumers or the financial system. Key components include cost modelling, customer communication, safeguarding run-off, and board accountability. These elements must be addressed comprehensively to meet the FCA's standards.

Firms must produce detailed evidence of cost modelling that accurately reflects the financial resources needed to execute a wind-down. This includes identifying all costs associated with the wind-down process, such as staff redundancies, contract terminations, and legal expenses. Accurate cost modelling is essential to demonstrate that the firm can wind down its operations without financial distress.

Customer communication is another critical aspect of wind-down planning. Firms are required to have clear and effective communication strategies to inform customers of the wind-down process. This includes timely notifications and guidance on how customers can access their funds or transfer their accounts. Proper communication helps mitigate customer confusion and potential complaints.

Safeguarding run-off is a crucial component to ensure that customer funds are protected during the wind-down process. Firms must provide evidence of how they will maintain safeguarding arrangements until all customer funds are returned. This includes maintaining segregated accounts and ensuring that any remaining funds are distributed in accordance with FCA rules.

Board accountability is a key focus in the FCA's wind-down planning expectations. The board must have visibility and oversight of the wind-down plan, ensuring that it is robust and actionable. Records of board discussions and decisions related to wind-down planning should be maintained as evidence of governance and accountability.

Current approaches using spreadsheets, emails, and shared folders often create governance gaps in wind-down planning. These methods lack the necessary controls and audit trails to ensure comprehensive oversight and accountability. Strengthening the position requires a systematic approach to documenting and managing wind-down plans, ensuring that all regulatory requirements are met.

RegNexus provides a regulatory operating infrastructure that supports payment institutions in organising their wind-down planning processes. By offering tools for governance, evidence management, and reporting, RegNexus helps firms maintain readiness and compliance with FCA expectations. For more information, visit the RegNexus solution page for payment institutions.