Kestrl – Compliance Team January 2025

Your money at Kestrl is protected by safeguarding rules, but what does this mean exactly?

Kestrl is not a bank and so is not covered by the Financial Services Compensation Scheme (FSCS). Instead your money is "safeguarded" by our Electronic Money (e-money) partner firm AF Payments authorised by the UK regulator under the Electronic Money Regulations 2011 (FRN: 900440).

Safeguarding is a set of laws that governs how an e-money firm must protect customer funds. The key difference is that whilst FSCS protects up to £120,000 of your deposits in the event of a Bank's closure, under safeguarding rules ALL of your funds must be ringfenced and sent back to the customer if Kestrl closes.

Once we receive your money it is placed in a dedicated “safeguarding account” with a bank, in our case this is with Maybank UK who then invest it into ‘low risk’ assets that have been approved by the UK regulator and Shariah advisors.

This safeguarding protection means that if Kestrl, or our e-money partner firm AF Payments fails, your funds will be secure in the safeguarding account and then returned to each customer. The protection also means that by law, these funds are protected from all other creditors of Kestrl or AF Payments who might make a claim,

What’s the difference between safeguarding and FSCS protection given by banks?

There are a few key differences between the way we protect your money, compared to a traditional bank who will provide FSCS or ‘deposit insurance’.

FSCS protection is provided by an independent body who will make payouts to customers in the event of a bank’s failure (usually up to £120,000). Safeguarding protection is given by the e-money institution itself, in our case AF Payments, authorised by the UK regulator under the Electronic Money Regulations 2011 (FRN: 900440).

Under FSCS there is a maximum amount that is protected by customers, usually up to £120,000 GBP. This is regardless of whether the FSCS firm has the funds or not. In the case of safeguarding, all of the funds are protected. This is because any compliant e-money institution cannot lend out the money received to anyone else, so there will always be enough money in the safeguarding account to payback all customers.

So, whilst if a bank fails there is a limit to how much money you’ll get back, you should receive all your funds in the event of an e-money failure. The only deduction that could be made from these accounts is the cost of arranging the send everyone’s money back to them after closing the e-money company.

Whilst an FSCS payout may take place within 7 days, an e-money payout could take a little longer as it is customers’ actual money being returned to them.

Safeguarding is applied to all funds held in your current or spending account. It does not apply to any investments you might make through Kestrl e.g. into gold or property, as no investment is risk free.

If you’d like to find out more about e-money safeguarding rules then please check out the following resources