By John Burns, Advisory Board member, My Compliance Centre

There is a concept in quality assurance known as “shelfware” – manuals that are written perfectly, placed on a shelf and never looked at again until an auditor arrives.

In the payments sector, one document that could easily become shelfware is the resolution pack. These will, from May this year, sit alongside the already required wind-down plans and will aim to provide the insolvency practitioner or administrator with all the information they need to return safeguarded funds to customers. Yet while they exist to satisfy a requirement, the risk is that they will lack the “connective tissue” needed to make them usable in a crisis.

It’s for this reason that the Financial Conduct Authority (FCA) doesn’t provide a template for resolution packs. Aside from the fact that payments firms come in a huge variety of sizes and business models, the regulator wants leaders to know how to unwind their business safely through rigorous data management and testing.

The reality test

Testing is crucial to resolution packs because it elevates them from a theoretical document to a workable plan. When a crisis hits – be it a liquidity crunch or a regulatory shutdown – executives do not have time to read a 200-page static document. They need accessible, accurate and up-to-date information.

If you’re unsure about where to start with strengthening your resolution pack, a sensible step for any firm is to seek advice from an insolvency practitioner. Ask them this: “If you walked in tomorrow to wind us down, would this document actually help you?” If they can’t use it, the plan is worthless.

And there’s a good, pressing reason for doing this exercise. During 2024/25, the FCA reviewed a sample of 14 firms with e-money and payments permissions, focusing on enterprise and liquidity risk management and wind-down planning.

The regulator found that “almost all” the wind-down plans it reviewed lacked “sufficient detail, testing and validation”, and “were disconnected from the firm’s risk management framework and needed more work to be credible and operable”. It went on to say that “firms should embed wind-down planning into their risk management framework, recognising that disorderly wind-down is a key driver of harm”.

Importantly, the FCA warned that shortcomings in wind-down triggers could indicate broader issues with firms’ risk management and risk appetite frameworks. I wouldn’t be surprised if this prompted the regulator to probe other areas in some of the businesses under review.

Structure creates credibility

So, how do you transform a static resolution pack into a usable and reassuring plan?

The answer lies in data structure, and it’s where tools like PayAssure become vital. By moving away from scattered documents and towards a standardised, evidenced framework, firms can link their live operational risks (see my previous article here) directly to their wind-down triggers.

If a trigger event occurs – for example, capital drops below a certain threshold – the firm shouldn’t be scrambling to find spreadsheets. The data should be organised, standardised and ready to hand over.

The regulator’s perception

Ultimately, readiness is about credibility. The FCA knows business failure is a possibility, and isn’t looking for a guarantee of eternal success; it merely wants proof that you can fail safely without destroying customer value.

If you can demonstrate that your information is structured, up-to-date and that your wind-down plan is tied to live operational realities, you change the dynamic of the conversation. You move from a firm that is hiding behind shelfware to one that has thought through all possible doomsday scenarios.

In short, a resolution pack should be viewed as a living guide rather than a final destination. Test it, challenge it and ensure your data is ready to support it. You never know when the regulator will want to see your plans.

Sources:

Risk management and wind-down planning at e-money and payments firms – multi-firm review