FCA multi-firm review: risk management and wind-down planning at e-money and payments firms

18 May 2026

Tags Financial services Insights

In June 2025, the Financial Conduct Authority (FCA) published a multi-firm review on ‘Risk management and wind-down planning at e-money and payments firms’[1].

The review identifies areas of good practice across e-money issuers and payment service providers (payments firms), alongside a number of recurring weaknesses that firms are expected to address.

The FCA’s findings reinforce the expectation that payments firms must have robust, integrated and forward-looking risk management and wind-down frameworks that remain proportionate as firms grow in size, complexity and systemic importance. In particular, this multi-firm review demonstrates that the FCA’s prudential expectations for payments firms are now closely aligned with those applied to other regulated firm types, including investment firms. This includes expectations around comprehensive risk of harm assessments, liquidity risk management, and capital and liquidity stress testing.

Key areas for improvement identified by the FCA

1. Enterprise-wide risk management frameworks

Many firms lacked well-defined processes to regularly identify and assess material risks, including risks arising from new activities or changes to the business model.

Some of the other key areas of improvement are as follows:

Limited use of stress testing of material risks to verify that resources are proportionate to the complexity of the business model.
Risk appetites based largely on management judgement, rather than analytical evidence.
Insufficient distinction between capital and liquidity risks and resources.

The FCA expects risk management frameworks to be dynamic, evidence‑based and clearly linked to senior management decision‑making.

2. Liquidity risk management

Although the FCA’s ‘Payment services and electronic money – our approach’ document mainly focuses on the capital requirements and capital risk management for payments firms, the multi-firm review reinforces the importance of liquidity risk as a core prudential risk for payments firms. Liquidity risk management was often less developed than other areas with firms not properly identifying, monitoring, controlling and stressing liquidity risk, and embedding this into risk management frameworks.

Key weaknesses included:

Lack of clarity around liquidity risks specific to the firm’s activities.
Inadequate controls and ongoing monitoring of liquidity positions.
Limited assessment of the impact of stress scenarios on cash balances and funding sources.

3. Group risk

The FCA also identified weaknesses in payments firms’ approaches to manage group risk. These included undue reliance on group support during stress or wind-down, lack of assessment of the interdependencies with the group and how this impacts financial and operational resilience, and unclear governance arrangements during crisis scenarios.

Firms are expected to assess how their reliance and interdependencies on the group are impacted and assess how disruption to their business operations (including wind-down) would impact the wider-group.

4. Wind-down planning

The FCA identified a number of material deficiencies with payment firms’ Wind-Down Plans (WDPs). WDPs were often disconnected from risk management frameworks, insufficiently operational or not supported by robust financial modelling.

In addition, the FCA emphasised specific issues including:

Setting wind-down triggers that are inconsistent with the firm’s risk management framework and that are not calibrated according to the firm’s risk appetite.
Limited financial modelling throughout the wind-down period including limited consideration of the impact on capital from changes to revenues and costs, or impact on liquidity throughout the wind-down.
Lack of analysis of whether key risks would crystallise during wind-down and not testing the impact of stresses that take place after the wind-down is started (e.g., redress, litigation costs, further operational risks crystallising).
Not analysing how the wind-down timeline can be delayed by issues such as safeguarding or contacting customers.

What are the key implications for payments firms?

The FCA has emphasised that it will continue to engage with the payment sector to ensure firms have effective and credible prudential arrangements in place.

Payments firms should review their existing risk management and wind down frameworks against the FCA’s findings and make improvements where necessary.

We assess that the key areas, next steps and where payments firms should focus on:

Ensuring enterprise risk management frameworks capture all material risks and are supported by calibrated risk appetites and stress testing, analysis and senior management involvement.
Strengthening liquidity risks specific to your business model in RCSAs and wider prudential and risk management documentation.
Ensuring the firm has robust processes in place to identify, control and monitor liquidity risks and to include appropriate stresses to liquidity in the firm’s stress testing documentation.
Enhancing wind‑down plans so they are financially modelled, operationally plausible and aligned to the firm’s overall risk framework.

Firms that proactively strengthen these foundations will be better positioned to meet evolving regulatory expectations and support sustainable growth.

How can Forvis Mazars support?

Our dedicated Prudential Team can support with the review and development of your risk management frameworks and Wind-down Plans (WDP) to align with the FCA feedback and industry good practices. Specifically, we can support firms with:

Risk management framework

Review the enterprise risk management framework to ensure alignment with industry standards and good practice.
Support development of the enterprise risk management framework including enhancing RCSAs, limit and indicator frameworks and controls. Specifically, we can support with establishing liquid asset risk assessments and metrics, proportionate to your business.

WDP

Review WDPs ensuring alignment to FCA expectations, industry good practice and proportionate to your business.
Author WDPs ensuring proportionality to your business, project management of the production process and collaboration with senior management.

Support embedding the WDP into wider risk management through.