When a payment firm fails: getting safeguarded funds back

If a money transfer company or e-money firm collapses, your money is not protected by the Financial Services Compensation Scheme (FSCS) in the way a bank deposit is. Instead, the firm's customers' money must have been kept separate, or safeguarded, and an insolvency practitioner is appointed to wind the firm up and return that money to the people it belongs to. That process is free, but it is slower than an FSCS payout and you usually have to make a claim.

The most recent example is Premier Payment Solutions Ltd, which traded as PPS Money and MTBS and entered liquidation on 10 September 2026¹. The firm provided money remittance services, mainly supporting money service businesses making cross-border payments, and its customers' route to their money now runs through the joint liquidators rather than through FSCS.

This page explains what happens when a payment firm fails, how safeguarded funds are returned, where FSCS protection does and does not apply, how long the process takes, and how to avoid the scams that follow a firm's collapse. For how your money is protected while a payment firm is still trading, see safeguarding and the FSCS.

PPS Money in liquidation: what it means for customers

On 10 September 2026, Premier Payment Solutions Ltd, which traded as PPS Money and MTBS, entered liquidation after experiencing significant financial difficulties¹. The firm provided money remittance services, primarily supporting money service businesses to make cross-border payments. Bai Cham and Gary Shankland of BTG Begbies Traynor were appointed joint liquidators on the same date¹.

For customers, liquidation means the firm has stopped trading and its affairs are being wound up. The liquidators take control of what the firm owns, including any customer money held under safeguarding rules, identify who is owed what, and distribute the available funds. Because PPS Money was a payment firm rather than a bank, FSCS deposit protection does not apply to its failure, so customers claim from the liquidation rather than receiving an automatic payout.

Where a claim is not met in full, the insolvency rules determine the order of payment. As an unsecured creditor, a customer comes towards the end of the line for payment, if there is any money left after the expenses of the winding up and after preferential creditors have been paid⁸. In practice, safeguarded customer money is held separately from the firm's own funds, which is what usually allows most or all of it to be returned, but the process depends on the liquidators reconciling the firm's records.

What happens when a financial firm goes bust

When a financial firm cannot pay its debts, it is typically placed into an insolvency process such as administration or liquidation⁹. An insolvency practitioner, called an administrator or liquidator depending on the process, is appointed to take control of the firm, work out what it owns and owes, and distribute what is available. What happens to your money next depends on the type of firm and the type of protection attached to it.

For customers of a bank, building society or credit union, the process is largely invisible. FSCS steps in and returns eligible deposits automatically, up to its compensation limit, without the customer needing to make a claim⁴. For customers of a payment or e-money firm, the position is different: FSCS cannot protect you if an e-money firm or payment services firm fails¹⁰, and the claim is made to the insolvency practitioner instead.

The FCA has also confirmed a narrow situation in which FSCS may help customers of a payments firm: it may look through the payments firm to compensate its customers if the UK bank where that firm safeguarded its customers' money itself fails. However, FSCS does not cover cases where the payments firm itself fails³. So if the bank holding the safeguarded pot collapses, FSCS protection can reach the underlying deposits, but if the payment company is the one that collapses, the safeguarded money is claimed through the insolvency.

MoneyHelper describes the same distinction for everyday accounts: an account that is not a bank account is likely to be a virtual current account covered by e-money rules, meaning your money is kept safe at a different bank, but if your provider failed you would need to make a claim to the administrator⁵. That is the trade-off these accounts carry: the money is segregated, but there is no automatic compensation scheme behind it.

Not every account or product is FSCS protected

FSCS covers a range of financial products if a UK-authorised financial firm fails, including deposits, insurance, investments, pensions, mortgage advice and certain other regulated services¹². It covers seven different types of business: deposits, insurance policies, insurance broking, investment business, mortgage advice or broking, debt management and funeral plans¹³. Anything outside that list, or held with a firm that was never authorised, falls outside the scheme.

The most common gap for people sending money is the payment and e-money sector. FSCS states plainly that it cannot protect you if an e-money firm or payment services firm fails¹⁰. The FCA's policy work confirms the same boundary, including the limited look-through protection described above³. So money in transit with a transfer company, or held in an app-based account that is an e-money wallet rather than a bank account, is not covered by FSCS deposit protection if the provider collapses.

Other gaps catch people out too:

• Credit insurance is not eligible for FSCS protection¹¹.
• Investments are covered for firm failure, but FSCS does not pay compensation simply because an investment performs worse than you hoped¹⁴.
• Pensions: FSCS can only protect you if the FCA has authorised your pension provider, and protection varies by the type of pension product, with limits on the amount it can compensate¹⁵.
• Defined benefit pension schemes themselves are protected by the Pension Protection Fund, not FSCS¹⁶.
• Debt management: money paid under an individual voluntary arrangement arranged by insolvency partners, which are not regulated by the FCA, is not protected¹³.

Before you use any financial product, FSCS suggests asking the provider three questions: is this product covered by FSCS, how much of my money is protected, and what would happen to my money if something happened to the provider¹⁷. For payment firms, the honest answer to the first question is usually no, which is why the safeguarding rules and the insolvency process matter so much in this market. The payment services regulations set out what firms must do while trading, and safeguarding and the FSCS explains how the separation of customer money works in practice.

FSCS deposit protection: up to £120,000 per person

For deposits at banks, building societies and credit unions, FSCS protects up to £120,000 per eligible person, per authorised firm². The limit applies to the total across all accounts you hold with that firm, not per account, and it applies per firm, so money at two separate banks counts separately. The £120,000 figure applies to firms failing after 30 November 2025¹².

Several details of the limit affect real situations:

• Sole traders are not treated as a separate entity from their company, so FSCS protects up to £120,000 in total across all personal and business accounts with the firm¹⁸.
• A business that is a separate legal entity, such as a limited company or LLP, can claim up to £120,000 for each account, so a small business account and a personal account with the same bank are protected separately¹⁹.
• Credit union deposits are protected up to £120,000 per person, in total across all accounts held with the credit union⁷.
• Joint accounts are treated as split between the holders. FSCS's protection checker assumes a joint account with two account holders has an equal share each¹¹, so each person's half counts towards their own £120,000 limit with that firm. MoneyHelper notes that interest in a joint account is usually split equally between each person for tax purposes too²⁰.

Two further rules matter for larger sums. First, temporary high balances: FSCS can compensate up to £1.4 million if the account was credited in the last six months, for example after selling a home⁵. The higher protection lasts for six months from when the amount was first deposited or legally transferred, after which the usual limit applies. Second, protection is per authorised firm, not per brand: several brands can share one banking licence, in which case money across those brands counts together towards one £120,000 limit. FSCS's protection checker shows which firms share an authorisation¹¹.

You can check whether a provider is authorised on the FCA Register²¹, and FSCS's own checker confirms whether your money is protected and how your accounts combine. Large companies can also claim compensation for deposits, although some exclusions apply¹³.

Where FSCS compensation stops

FSCS pays compensation if your financial services provider fails and cannot pay back your money itself²¹. But eligibility has conditions, and the scheme's own rules set out all of the following: the firm was authorised, it carried out a regulated activity for you, you lost money, and it owes you a legal liability²². If any of those is missing, there is no claim.

The boundaries matter in practice:

• Payment and e-money firms: FSCS does not cover cases where the payments firm itself fails³. Your route is the insolvency practitioner and the safeguarded funds.
• Unauthorised firms: FSCS only covers firms authorised by the FCA or the Prudential Regulation Authority to do business in the UK¹³. A firm with no UK authorisation, including most cryptoasset providers, is outside the scheme.
• Performance losses: FSCS does not pay compensation if your investment does not perform as well as you hoped¹⁴. Protection is against the firm failing, not against the market falling.
• Pension advice: for defined benefit transfer advice claims, the compensation limit is £85,000, not £120,000¹⁶.
• Debt management: for firms that failed after 1 April 2019, the limit is £85,000 per eligible person, per firm²³.
• Client money costs: in some insolvencies, FSCS covers the costs deducted by joint special administrators for distributing client money from the client money pool, but it has stated it is not yet open to claims relating to those costs in the Dolfin case²⁴.
• Funeral plans: FSCS protects holders of an authorised funeral plan where a provider has failed and arrangements with a new regulated provider are not in place⁶.

The limit also stops at £120,000 per person per firm for deposits. Anyone holding more than that with a single firm, outside a temporary high balance period, stands to lose the excess in a failure. Spreading deposits across separately authorised firms is the main way people manage that risk, and the FSCS checker shows which brands share a licence¹¹.

How long it takes to get money back

For bank, building society and credit union failures, the answer is fast. FSCS aims to pay compensation within seven days of a failure in most cases¹³, and describes the standard as returning money within seven working days in most cases, automatically¹⁸. The Bank of England's explainer puts it the same way: payments to account holders are typically made within seven days of the firm failing, although complex claims may take longer⁹. For credit unions, FSCS will normally return money within seven working days from the date the credit union failed⁷.

For payment and e-money firms, there is no comparable timetable. The money comes back through the insolvency, and how long that takes depends on how quickly the liquidator can reconcile the firm's records, verify claims, and distribute the safeguarded funds. FSCS notes the same principle in the debt management context: it aims to pay claims as soon as possible, but the time varies depending on how quickly the insolvency practitioner can reconcile the data from the failed firm²³.

In practical terms, the difference is between an automatic process with a published service standard and a legal process with none. A bank failure is handled behind the scenes, with FSCS working with the failed firm, the FCA and the insolvency practitioner, and in most circumstances customers do not need to make a claim⁶. A payment firm failure puts the customer in the creditor queue: you register your claim, provide evidence, and wait for the liquidator to complete the reconciliation. Delays of months are normal in insolvencies, and the amount returned can be reduced by the costs of the process itself.

Claiming is free: no claims company is needed

FSCS is funded by a levy on the authorised firms whose customers it protects, and it is free to use⁹. Its own statement is unambiguous: the service is free to use, and customers keep 100% of any compensation owed when claiming directly⁶. FSCS also says it will never ask you to send it money¹⁶.

The same principle applies to claims on a failed payment firm. Registering a claim with a liquidator is part of the insolvency process and does not require a paid intermediary. Claims management companies offer to pursue compensation on your behalf, but they charge fees, which means you keep less of whatever is recovered. If you have a complaint about a claims company, you can complain through the route set out by the Financial Ombudsman Service, and complaints about poor service are referred to the ombudsman²⁵.

For most FSCS claims there is nothing to pay and often nothing to do. If your bank, building society or credit union has failed, you do not need to make a claim: FSCS returns your money automatically, up to its compensation limit⁴. Even in cases where a claim is needed, for example for investment or pension advice, the process is designed to be completed directly, and FSCS publishes eligibility rules so you can check your own position before starting²².

Fake compensation calls and other scams after a failure

A firm's collapse is a hook for fraudsters, because they know thousands of people are expecting news about their money. FSCS has published seven warning signs of a scam communication²⁶:

1. You are asked for money or payment details.
2. The message comes from an unusual source, like WhatsApp.
3. The phone number is not the one on the official website.
4. The email does not end @fscs.org.uk.
5. The firm mentioned is unregulated, such as a cryptoasset provider.
6. Compensation is offered in a foreign currency, or the firm is in another country.
7. The message uses American spellings or contains spelling errors.

FSCS has seen real examples of this. It describes a fraudulent letter that promises the return of some invested money if a trade reference number can be provided, then encourages the customer to call the scammer and pay for a temporary licence²⁶. FSCS pays compensation in pound sterling, not in any other currency, so any offer of compensation in a foreign currency is itself a warning sign²⁶.

If you have already been tricked into making a payment, there are rules that may help. For Faster Payments and CHAPS transfers made as part of a scam on or after 7 October 2024, to another UK account, and reported to your bank or payment provider no more than 13 months after the last payment, reimbursement rules apply²⁷. Where those rules do not cover the payment, for example me-to-me scams, card payments to genuine merchants, overseas payments and cash withdrawals handed to a scammer, the Financial Ombudsman Service can still help²⁷. FSCS's advice if you have been scammed is to speak to your bank, building society or credit union, which can protect and reimburse victims of certain types of fraud, and to report it to Action Fraud at www.actionfraud.police.uk²⁶. The scams section covers this in more depth.

Where to get help and how to complain

Free, impartial help is available at every stage. FSCS can be reached on 0800 678 1100 and at communication@fscs.org.uk⁷, and its website includes a protection checker and claim guides. MoneyHelper, the government-backed money guidance service, publishes free information on accounts and protection. For a failed payment firm, the insolvency practitioner is the primary contact, and the FCA's news story announcing a liquidation names the appointed liquidators¹.

If you have a complaint about how a firm treated you before it failed, or about how a payment was handled, the Financial Ombudsman Service can consider complaints about banking and payments, including account closures, disputed transactions, IT failures and problems with switching services²⁸. It also covers e-money businesses: if it thinks the e-money business has done something wrong, it will tell them to put things right, and may tell them to pay compensation for distress or inconvenience²⁹. Where an account was frozen or a payment was suspended and you lost money as a result, the ombudsman can tell the bank or building society to put things right³⁰.

The complaint route is the same whatever the subject: first talk to the firm, give it the chance to put things right, make a formal complaint, and if you are unhappy with its final response, refer the matter to the ombudsman²⁷. The Payment Systems Regulator gives the same advice for payment problems: contact your provider first, and you can also contact the Financial Ombudsman Service if you are still unhappy³¹. Complaining to the ombudsman is free.

The volume of complaints in this market is real. The ombudsman's quarterly complaints data for the first quarter of 2026/27 recorded 77 complaints opened about money remittance businesses³², a reminder that problems with transfer firms are common enough to have their own category in the data. If a firm has failed and you are chasing safeguarded money, the liquidator is the first stop; if the dispute is about how a payment went wrong while the firm was trading, the ombudsman is the backstop.