The Importance Of Safeguarding To Money Service Businesses (MSBs)

A bank vault to signify safeguarding in our foreign exchange trading platform.

Safeguarding is amongst the most important regulations for UK financial businesses and Forex brokers. These regulations have been set out by the Financial Conduct Authority (FCA) to help payment firms with their prudential risk management. Thanks to the FCA, customers are safeguarded against immoral, less scrupulous Forex brokers, who at times display bad practices. The team here at Impress Solutions, who have designed their own safeguarding-compliant foreign exchange trading platform, isCT, wanted to look at the importance of safeguarding and trust to both brokers and other MSBs.

Why Is Safeguarding Necessary?

For any industry to be healthy, there needs to be a guaranteed base level of trust in its operation. If you don’t have that trust, you quickly end up with a sector propped up on very shaky ground. On the flipside of this, the greater the level of trust within a market, the greater its overall integrity, and that can only be a good thing from a stability perspective. Investors and traders have a right to know that the capital they’re investing is protected, especially in the event of liquidation, fraud or bankruptcy.

What Funds Should Be Safeguarded? 

The term for monies needing safeguarding is ‘relevant funds’. There are two main types of relevant fund which need safeguarding, these are:

  • Customer money held for a payment transaction
  • Customer money held in exchange for e-money

Firms must be able to display that relevant funds are being appropriately managed and looked after daily. The FCA regularly advises firms to review and upgrade their safeguarding processes, wherever possible. A platform such as isCT can help do exactly that.

How Does Our Foreign Exchange Trading Platform Help With Safeguarding?

So, we’ve established why exactly safeguarding is so vital to MSBs, but how can isCT help? Safeguarding needs to take place as soon as money changes hands, and the funds have been received. It does not stop until the funds have then been paid out to the payee’s payment service provider (PSP). Our Forex trading platform enables customers to manage and report their trading and finance operations at all times, accurately and with consummate ease.

Saving Time And Stress

A common issue for MSBs is dealing with their safeguarding but doing so in a way that doesn’t massively drain on a company’s time. Ordinarily, because of how long manual safeguarding checks take, companies run less optimally than is possible in an attempt to uphold maximum levels of compliance. IsCT features modules which drastically streamline and automate these safeguarding and compliance processes. This, therefore, saves MSBs time and a huge amount of stress, knowing that it’s being accurately processed and simultaneously freeing up time for employees to get on with other important facets of the business.

Other Regulatory Compliance

Another major benefit of our foreign exchange trading platform is that it ensures compliance across a range of different regulations. These include:

  • PSD2
  • AML
  • GDPR
  • MiFID II

The Importance Of Being Up To Date

We’ve seen over the past few months, due to COVID-19, the importance of adaptability; keeping on top of industry updates is essential. In fact, only earlier this month the FCA issued a finalised set of guidance pertaining to the safeguarding of relevant funds during the COVID-19 crisis, which you can find here. They have found, for instance, that many firms are not addressing safeguarding discrepancies quickly enough, and that even more firms display a lack of clear records, regarding the relevant funds held by the firm.

What may once have been adequate in terms of safeguarding may now leave you incompliant. Oftentimes, a lack of safeguarding compliance doesn’t stem from anything nefarious. It isn’t always the case that it’s an unregulated, immoral broker. It may just as well be outdated processes. Our Forex trading platform is fully up to date with all the latest safeguarding measures.

The financial markets are predicated on trust and on compliant processes. Failure to adhere to safeguarding measures can lead to the FCA revoking a broker’s license and even imposing sanctions. So, if you’d like to find out more about our Forex trading application, and how it helps with safeguarding, then get in touch! Contact Impress Solutions today on 01708 759 760.

This entry was posted in Fintech Solutions and tagged Foreign Exchange Trading Platform, Forex Trading Application, Forex Trading Platform.