By: Money Navigator Research Team
Last Reviewed: 23/01/2026
FACT CHECKED
Quick Summary
If an e-money provider enters administration, access to balances commonly pauses while an insolvency practitioner identifies the safeguarded funds pool, reconciles records, and sets a process for returning customer money.
Because e-money balances are not covered by the FSCS, repayment is typically handled through insolvency processes, which can introduce practical delays (for example, data verification and reconciliation steps).
For background on how safeguarding works (and how it differs from deposit cover), see our guides on safeguarding for e-money institutions and safeguarding vs deposit cover.
This article is educational and not financial advice.
What “administration” usually means for an e-money provider
“Administration” is a formal insolvency process where control moves to an insolvency practitioner (the administrator).
GOV.UK summarises the general process, including that the administrator notifies creditors and Companies House and publishes notices (commonly via The Gazette), and that they must produce a statement of proposals within a set period in standard administrations (for context, see GOV.UK’s administration overview and The Gazette’s explanation of administrator appointment notices).
For payment and e-money firms, there is also a specialist regime (often referred to as a special administration approach) introduced to address historically slow returns of customer funds.
HM Treasury’s overview of the regime explains it was introduced because of delays in customers accessing funds, and it includes an objective to return customer money as soon as practicable (see HM Treasury’s overview of the Payment and Electronic Money Special Administration Regime).
Why access can pause even when funds are “safeguarded”
Safeguarding is a regulatory requirement for e-money institutions and payment institutions. The FCA explains that relevant funds must be safeguarded under the applicable regulations and FCA approach documents (see the FCA overview of safeguarding requirements for payment institutions and e-money institutions).
However, safeguarding does not automatically mean instant access during insolvency. Two regulator-facing points matter for practical timelines:
FSCS cover does not apply to e-money balances held with payment and e-money firms. The FCA has been explicit that this can mean delays to funds being returned if a firm fails (see the FCA announcement on safeguarding rules changes and failure outcomes). The FSCS also highlights that it cannot return money held with e-money institutions using its usual compensation process, and that money may be tied up during insolvency (see the FSCS guide on e-money and FSCS cover).
Returning funds is an identification and reconciliation exercise. Someone must confirm (a) what sits in safeguarding arrangements, (b) which customers are entitled to what, and (c) whether any amounts are subject to timing differences (for example, pending card settlement or unresolved disputes).
If you want the “failure basics” without the administration workflow detail, our dedicated guide on access to safeguarded funds if an e-money provider fails covers the broader concept. This article focuses on what typically happens when the firm is actually in administration.
Typical access steps after an e-money provider enters administration
Different cases run differently, but the access path below is common across administrations where customer funds must be returned.
1) Initial restriction of the account or platform
Common immediate effects include:
App or web access becoming read-only, limited, or unavailable
Cards and payment rails being paused
New inbound transfers being rejected or returned (the mechanics vary by scheme, bank partner and status)
Operationally, this resembles a restriction event. If you’re mapping knock-on impacts (for example, incoming payments), our guide on incoming payments when an account is closed provides useful background on how payments can bounce or return in closure-like states (administration often creates similar inbound/outbound disruption, even if the legal status differs).
2) Administrator appointment and public notices
Once appointed, administrators typically:
Publish appointment information via official channels (often visible on The Gazette)
Provide a contact route (email/portal) and outline next steps
Start gathering records needed to identify customer entitlements
For what this notice generally contains, The Gazette explains the “appointment of administrators” notice type.
3) Ring-fencing and identifying the safeguarded funds pool
The core task is to identify what is actually in the safeguarding arrangements and separate it from the firm’s operational estate (where applicable). Regulatory context sits in:
The FCA’s explanation of safeguarding expectations (see the FCA safeguarding requirements overview)
The underlying regulations (primary sources in legislation), including the Electronic Money Regulations 2011 (PDF) and the Payment Services Regulations 2017 (PDF)
4) Reconciliations and customer-by-customer balance verification
This step is where delays frequently build. It typically involves:
Matching internal ledgers to bank safeguarding accounts (often across multiple accounts/currencies)
Resolving timing differences (pending settlement, reversals, refunds)
Confirming customer identity records are adequate to pay out to the right legal entity
This is one reason the FCA has continued to tighten safeguarding expectations to reduce harm and improve return outcomes in failures (see the FCA policy statement on safeguarding regime changes and the FCA announcement on the May 2026 rules commencement).
5) Claims process and communications
Administrators usually publish:
What customers need to provide (for example, confirming entity details)
How balances will be calculated (snapshot date and treatment of pending items)
How distributions will work (one-off vs staged)
Where a payment/e-money special administration approach is used, the overall design is intended to prioritise returning customer funds as soon as practicable (see HM Treasury’s PESAR overview).
6) Distributions (returning customer money)
Returns can happen in stages where:
An initial distribution is possible once the administrator is comfortable the records are reliable
A later “true-up” may occur if late adjustments arise (for example, chargebacks or settlement corrections)
If your scenario involves card disputes, the timing and treatment of reversals matters. Our guide on card disputes during administration and liquidation explains the typical moving parts without assuming a single outcome.
Summary table
| Scenario | Outcome | Practical impact |
|---|---|---|
| Provider announces administration; platform restricts access | Spending and transfers may pause | Day-to-day payment flow can be disrupted until alternative payment routes exist |
| Administrator appointed and publishes next-step communications | Customers are directed to a process/portal | Expect a period of information gathering and verification before returns start |
| Safeguarding accounts and ledgers reconcile cleanly | Returns can be processed once approvals and checks are complete | Funds may be returned sooner relative to complex cases, but timing still varies |
| Multi-currency, multiple partners, or incomplete records | Reconciliation takes longer | Access delays can extend while balances are validated |
| Pending card settlement/chargebacks exist at the snapshot date | Balance may be adjusted as items complete | The figure returned may differ from an in-app balance shown immediately pre-pause |
| Evidence of a shortfall in the safeguarded pool | Customer claims may be paid pro-rata after costs and rules are applied | Not all balances may be returned in full |
What typically drives delays
Delays are rarely caused by a single step. More often, they arise from combinations of:
Data quality and mapping: Whether the provider can map every ledger line to a legal customer entity quickly.
Omnibus safeguarding structures: Where funds are held in pooled structures, extra work may be needed to confirm each customer’s entitlement.
Multiple banking partners and schemes: Each partner’s operational cut-offs, reconciliation files, and settlement cycles can matter.
Open items at the cut-off: Card settlement, reversals, refunds and chargebacks can require post-snapshot adjustments (see our card dispute workflow guide).
Insolvency pathway: Where a payment/e-money special administration approach applies, it is designed with specific customer fund return objectives (see HM Treasury’s PESAR overview).
Scenario Table
| Scenario-level | Process-level | Outcome-level |
|---|---|---|
| Clean, single-currency programme with strong reconciliation files | Safeguarding bank balance aligns with internal ledgers; customer list is easily validated | Customer returns are operationally simpler once checks complete |
| Multi-currency balances across several safeguarding accounts | Multiple reconciliations required; FX timing differences must be resolved | Returns can take longer, and final values may need post-reconciliation adjustments |
| Significant pending card activity at the administration cut-off | Settlement files arrive after cut-off; disputes/reversals continue to mature | Interim figures may later be corrected up or down |
| Pooled safeguarding plus incomplete customer identifiers | Extra verification needed to ensure payouts go to the correct legal entity | Longer delays before distributions, and additional information requests may occur |
| Evidence of safeguarding shortfall | Administrator must determine allocation method and apply insolvency rules | Returns may be partial rather than whole, depending on the final pool and costs |
Common edge cases that create confusion
“My fintech uses a bank – does that mean FSCS deposit cover applies to me?”
Some products are structured as bank accounts (with the bank as the deposit-taker), while others are e-money accounts (with an EMI issuing e-money and safeguarding funds). The label “account” is not, on its own, enough to confirm which regime applies.
A neutral way to verify a firm’s status is the FCA’s guidance on how to check a firm is authorised, using the FCA register tools it references.
“What if the safeguarding bank fails rather than the EMI?”
Safeguarding often involves placing relevant funds into a separate account at an authorised credit institution (see safeguarding option provisions in the Electronic Money Regulations 2011 (PDF)). In that structure, the account is typically held in the name of the EMI (with specific designation rules), which means end-customer outcomes can be structurally different from “each customer holds their own deposit at the bank”.
This is one reason the FCA states that safeguarded funds are not directly covered by FSCS in the way deposits are, and that delays or losses can occur if the firm fails (see FCA safeguarding rule changes press release).
“Does a limited company get a separate FSCS limit from the director personally?”
FSCS explains how it applies limits across personal and small business accounts and distinguishes separate legal entities (for example, companies and LLPs) from sole traders in its bank cover page. The Bank of England also explains that limits apply per person and per authorised firm (see its FSCS explainer).
Compare Business Bank Accounts
E-money accounts and business bank accounts can look similar in apps, but the failure pathway is not the same.
Banks that accept deposits are associated with FSCS deposit cover (within scheme rules), while e-money balances rely on safeguarding and insolvency processes rather than an FSCS payout mechanism. For a deeper comparison:
Use our guide on FSCS cover for money in a business bank account for the bank side.
If you’re evaluating operational features and provider types, our business bank accounts hub summarises mainstream options and comparison angles (fees, eligibility, and features), without assuming a single “best” outcome for every business model.
Frequently Asked Questions
E-money balances held with e-money institutions and many payment firms are not covered by the FSCS compensation mechanism.
The FCA has stated that this can mean customers experience delays (and in some cases losses) if a payment or e-money firm fails, because funds are returned through safeguarding and insolvency processes rather than FSCS payout processes (see the FCA’s note in its safeguarding rules changes announcement).
The FSCS also explains that it cannot return money held with e-money institutions using its standard compensation service, and highlights that money may be tied up during insolvency (see the FSCS guide on e-money and FSCS cover).
Safeguarding focuses on how customer funds are held relative to a firm’s own money. It does not remove the need to verify and reconcile records during insolvency so the right amounts go to the right customers.
In practice, administrators typically need to confirm the safeguarded pool and match it to customer ledgers before distributing funds. The FCA’s safeguarding overview sets out the regulatory expectation that relevant funds are safeguarded under the applicable regulations (see the FCA safeguarding requirements overview).
The UK introduced a specialist approach for payment and e-money firm insolvencies in response to cases where customers faced long waits to access their money.
HM Treasury summarises this as the Payment and Electronic Money Special Administration Regime (PESAR), including objectives aimed at returning customer funds as soon as practicable (see HM Treasury’s PESAR overview).
Not every case will present identically in customer experience, but the regime exists specifically because customer fund return speed is a recurring practical issue in this sector.
In many administrations, payment functionality pauses quickly because continuing to process transactions can complicate reconciliation and increase operational risk during insolvency.
Cards can be affected by authorisations, settlement timing, and scheme rules, while transfers depend on bank partner rails and the status of the accounts used.
Even where a balance is later returned, the day-to-day ability to spend or receive can be disrupted in the interim. For related mechanics around disputes and settlement, see our guide on card disputes during administration and liquidation.
There is no single timetable that applies to every administration. The overall timeline depends heavily on reconciliation complexity, data quality, programme structure (for example, pooled arrangements), and the insolvency route used.
What can be said reliably is that official bodies have repeatedly noted that funds can be tied up during insolvency processes for e-money and payment firms (see the FSCS guide on e-money and FSCS cover and the FCA’s note on delays in its safeguarding rules announcement).
Pending disputes, reversals and chargebacks can complicate the balance calculation because they may mature after the administration cut-off date. Administrators often need to decide how to treat “open items” so payouts reflect the final economic position once schemes complete processing.
That means a balance shown in an app shortly before restriction may not match the final amount that is returned, particularly if there are late settlement adjustments. Our guide on card disputes during administration and liquidation explains the typical moving parts and why timing matters.
Safeguarding is designed to keep customer funds separate, but shortfalls can still occur in real cases (for example, where there are reconciliation failures, operational errors, or costs applied under insolvency rules).
The FCA has referenced historical issues where weak safeguarding practices created harm, which is one reason it has strengthened safeguarding requirements (see the FCA policy statement on safeguarding regime changes).
Where a shortfall exists, the administrator typically has to determine allocation and distribution mechanics under the applicable rules, which can result in partial returns rather than whole returns.
Administrators commonly publish appointment and contact details via official channels, including notices accessible through The Gazette. The Gazette explains what an administrator appointment notice generally contains (see The Gazette’s “appointment of administrators” notice explainer).
Depending on the case, details may also appear through Companies House filings and administrator communications sent directly to customers and creditors.
Inbound payments may reject, return to sender, or be held depending on the payment type and the status of the receiving rails (bank partner accounts, sort code/account number routing, and scheme processing). This is highly operational and case-specific.
For a related explanation of what can happen when inbound payments hit an account that is no longer operational, our guide on incoming payments when an account is closed is a useful reference point, even though administration and closure are not identical legal states.
No. Deposit-taking banks sit in a different regulatory perimeter and, in many cases, bank deposit balances are associated with FSCS deposit cover within scheme rules. E-money balances rely on safeguarding and insolvency processes rather than FSCS compensation.
If you’re comparing the two, our guides on FSCS cover for money in a business bank account and safeguarding vs deposit cover explain the core difference in plain terms.
The hidden constraint in e-money insolvencies is not usually the headline concept of “safeguarding” – it’s the operational proof.
Even where customer money is held separately, administrators still have to demonstrate (often line-by-line) who is entitled to what, across multiple partners, currencies, and settlement cycles, and then pay out to the correct legal entity. That identity-and-ledger mapping exercise is what drives many delays.
In other words, the customer experience depends less on labels in an app and more on the underlying programme structure: how funds were held, how often reconciliations were done, and how cleanly ledgers map to customers at the moment the firm enters administration.
Sources & References
FCA overview of safeguarding requirements for payment institutions and e-money institutions
FCA announcement on payment safeguarding rules changes and May 2026 commencement
FCA policy statement on safeguarding regime changes (PS25/12)
HM Treasury overview of the Payment and Electronic Money Special Administration Regime
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