Wind-down planning under PSD3: what Irish firms need to do now

PSD3 outlines specific requirements, including the requirement for payment and e-money institutions to prepare wind-down plans as part of the authorisation process. However, the directive provides limited detail on what these plans should include. In practice, firms must rely on supervisory expectations and existing guidance. In Ireland, the Central Bank of Ireland (CBI) has placed increasing scrutiny on wind-down plans, with a particular focus on their credibility and executability.  

This deep dive is the first of a three-part series on specific requirements, key insights and practical implications as a result of the updated regulatory framework. View part 2 of our deep dive series: PSD3 licensing changes and part 3: PSD3 fraud prevention.

A high-level requirement under PSD3

PSD3 requires firms to submit a wind-down plan outlining how they would exit the market in an orderly manner. This includes consideration of:

• The cessation of services
• The treatment of safeguarded customer funds
• Dependencies on outsourcing providers and agents

PSD3 does not define what a “good” wind-down plan looks like in practice. Guidance on governance, funding and execution remains limited, meaning firms must interpret expectations themselves and rely more heavily on national regulators and existing frameworks.

Increased scrutiny in Ireland

The CBI has placed growing emphasis on wind-down planning as part of the authorisation process. In particular, firms are being challenged on:

• Whether plans are operationally executable, rather than theoretical
• The adequacy of financial resources to support wind-down
• The feasibility of returning safeguarded funds in a timely manner
• The impact of outsourcing and third-party dependencies

Template-based or overly generic plans are unlikely to meet expectations. Firms are instead expected to produce plans that are clearly linked to their specific business model and risk profile.

What should be included in a wind-down plan?

The following elements should be included at a minimum in a well-developed wind-down plan.

Wind-down strategy

A clear articulation of how the firm would exit the market, including key assumptions and identification of critical services.

Triggers and governance

Defined wind-down triggers (e.g. capital or liquidity thresholds), along with governance arrangements, roles and responsibilities and board oversight.

Financial resources

A robust assessment of wind-down costs and demonstration that sufficient capital and liquidity are available to fund an orderly exit.  This should be supported by a full wind-down financial projection, setting out expected cashflows, funding requirements and key assumptions over the wind-down period.

Safeguarding and customer outcomes

Detailed processes for reconciling and returning safeguarded funds, including realistic timelines and contingency scenarios.

Operational execution

A practical, step-by-step plan covering customer communications, service wind-down and systems management.

Third-party dependencies

Identification of key outsourcing providers and contingency plans where these services are disrupted.

Legal and regulatory considerations

Regulatory notification requirements and interaction with insolvency processes.

Communication plan

A clearly defined communication strategy covering key stakeholders, including customers, regulators, employees and third-party providers. This should set out the timing, method and content of communications, ensuring they are clear, consistent and aligned with regulatory expectations during the wind-down process.

Leveraging existing regulatory guidance

In the absence of detailed PSD3 requirements, firms can look to other regulatory guidance to inform their approach:

• Central Bank of Ireland (CBI): Authorisation guidance emphasises the need for credible, well-funded wind-down plans, closely linked to safeguarding and overall risk management.
• Financial Conduct Authority (FCA): While not directly applicable to EU firms, the FCA’s wind-down planning guidance provides a detailed framework that is widely regarded as best practice. It includes expectations around clearly defined wind-down triggers, robust cost and liquidity modelling, governance and decision-making structures and practical execution planning. In the absence of detailed requirements under PSD3, many firms use the FCA guidance as a useful reference point when developing credible wind-down plans.
• De Nederlandsche Bank (DNB): DNB has published guidance and supervisory findings on recovery and exit planning for payment and e-money institutions, including its 2026 review of exit plans. This highlights key expectations such as maintaining up-to-date plans, using realistic timelines for returning safeguarded customer funds and addressing dependencies on group entities and outsourcing providers. It also emphasises the need for credible exit scenarios and sufficient financial resources, noting that firms often underestimate the time and cost required for an orderly wind-down.

Key takeaway

While PSD3 introduces wind-down planning as a formal requirement, it is supervisory scrutiny, particularly from the Central Bank of Ireland, that is shaping what “good” looks like in practice.

Firms should act early to develop detailed, tailored and operationally credible wind-down plans, rather than relying on high-level frameworks. Those that do so will be better positioned to meet authorisation expectations and respond effectively in periods of stress.

How Forvis Mazars can help

Our prudential risk experts recognise that wind-down planning under PSD3, alongside increasing supervisory scrutiny from regulators such as the Central Bank of Ireland, is becoming a key area of focus for payment and e-money institutions.

We support clients in developing and enhancing wind-down plans by reviewing governance, financial projections and operational frameworks against evolving regulatory expectations, while identifying gaps and strengthening overall plan credibility to ensure arrangements are practical, well-resourced and capable of being executed in a stress scenario.