Regulatory Reporting for Multi-Licence Payment Firms

Safeguarding compliance is what a firm does. Regulatory reporting is what the regulator sees, and for a group holding several licences it is the harder of the two.

Each regulator wants its own figures, on its own cycle, in its own format, against its own definition of what is being reported. The figures all derive from the same customer funds, so they must agree with each other. And the moment they do not, the disagreement is the finding.

This article sets out the reporting obligations a multi-licence group carries, how the calendars conflict, and where the inconsistencies come from.

What does each regulator require?

The structural point is that the UK's monthly cycle is by some distance the tightest, and a group subject to it will find UK reporting sets the pace for everything else. The figures have to be right every month whether or not another regulator asks.

What does the UK monthly return require?

The monthly safeguarding return under SUP 16.14A is submitted through RegData and covers, in substance, the safeguarding position across the reporting period.

That includes the relevant funds held, the segregation position, reconciliation performance across the period, shortfalls identified and how they were remedied, the safeguarding accounts and assets held, the safeguarding method used, and breaches and notifications.

Two features make it operationally demanding.

It is monthly, not annual. Twelve production cycles a year, each requiring figures that reconcile to the daily reconciliation records beneath them.

It reports performance, not just position. The return asks how the reconciliation process performed across the period, not only what the balance was at the end. A firm that reconciles monthly cannot produce a credible monthly return about reconciliation performed on each reconciliation day.

Our guide to UK CASS 15 safeguarding requirements covers the underlying obligations the return reports on.

Why must the figures agree between returns?

Because they all derive from the same customer funds, and a regulator comparing two of your documents expects to find the same number.

Three comparisons are made routinely, and each has ended badly for firms where the figures disagreed.

The monthly return against the annual audit. The audit examines the same period the returns reported on. Where the audited position differs from what the returns stated, the difference is not treated as an accounting variance. It is treated as evidence that the firm's records and controls are unreliable, which is a more serious finding than the discrepancy itself.

The safeguarding return against the prudential return. Customer funds and own funds are different populations, and both returns describe the same balance sheet. Inconsistent treatment of the same item appears in both.

One jurisdiction's figures against another's. Where a group reports customer funds to two regulators and the totals cannot be reconciled to each other, a supervisor asking a group-level question receives two answers.

The common cause is not arithmetic. It is that the returns were produced from different sources on different dates by different people, using definitions that had drifted apart.

How do the reporting calendars conflict?

A group with several licences faces a reporting obligation in most weeks of the year, and the obligations do not align.

Four specific conflicts recur.

Monthly against annual. The UK monthly cycle runs continuously while the Canadian annual report and Singaporean and Hong Kong audits arrive at fixed points. The same team produces both, and the annual obligation lands in a month where the monthly return is also due.

Period-end definitions differ. A reporting period defined by calendar month in one jurisdiction and by a firm's financial year in another means the same underlying data is cut differently for each.

Audit periods do not align with reporting periods. The UK safeguarding audit period must not exceed 53 weeks and is set by the firm. Where it does not align with the monthly return cycle, the audited period spans returns rather than matching them.

Deadlines cluster. Several regulators use month-end or quarter-end reference dates, so the production work concentrates rather than spreading.

The practical consequence is that a group needs a reporting calendar as a managed artefact, with owners, dependencies and lead times, rather than a set of diary entries.

Where do reporting errors come from?

Five causes account for most of them.

Manual assembly. Figures collected from several systems into a spreadsheet, then keyed into a return. Every transfer is a chance to introduce an error, and the error is invisible because the spreadsheet is internally consistent.

Definitional drift. The same commercial arrangement treated as protected funds in one entity's figures and not another's, with nobody holding the definition centrally.

Timing. Figures drawn on different dates for different returns, so two documents describing the same period do not match.

Late adjustments. A correction made to one return and not propagated to others produced from the same data.

No reconciliation between returns. Most firms check that each return is internally correct. Fewer check that returns agree with each other, which is the check a supervisor performs.

The pattern is that returns produced as a by-product of operational records tend to agree, and returns assembled as a reporting exercise tend not to.

What does good look like?

Five characteristics, each of which a supervisor can test.

One source. Every return derives from the same record of customer funds, accounts and movements. Where two returns report the same figure, they read it from the same place.

Definitions held centrally, applied per regime. The group holds one view of each commercial arrangement, and each jurisdiction's definition is applied to it. Not several entities each deciding independently.

Figures traceable to source. Any number in any return can be traced to the underlying reconciliation, account and movement. This is what an auditor asks for and what a supervisor tests on sampling.

Returns reconciled to each other before submission. A deliberate check that the monthly return, the prudential return and the other jurisdictions' figures tell the same story.

A managed calendar. Owners, lead times, dependencies and sign-off per obligation, visible ahead of the deadline rather than assembled at it.

Our guide to multi-jurisdiction safeguarding compliance sets out the underlying structures that make this achievable.