Wind-Down Plan

A wind-down plan is a document in which a regulated financial firm sets out how it would stop doing business in an orderly way, returning customer money, ending contracts and closing systems without causing harm to customers or the wider market. Supervisors require such plans from payment institutions, e-money institutions, investment firms, crypto-asset service providers and financial market infrastructures.

Wind-down planning sits alongside two related ideas. A recovery plan describes how a firm in trouble could restore its health and keep going, while a resolution plan describes how authorities could restructure or close a failing bank. A wind-down plan assumes the firm will stop trading and focuses on an exit that is "solvent" where possible. The phrase is also used for the practical exit process after a regulator withdraws a licence or closes a market.

Think of a shop owner who keeps a folder labelled "If we ever close". It lists who holds gift cards and how to refund them, which suppliers must be paid, when the lease can end and who will switch off the alarm. Most owners never open the folder, but if the shop has to close quickly, nobody has to guess.

A wind-down plan is that folder for a financial firm. Because the firm holds other people's money, the key question is simple: if the business stopped next month, how would every customer get their money back, and how long would it take?

Regulators' guidance differs in detail, but most plans cover the same ground:

• Triggers and indicators. Measures of capital, liquidity, profitability or operational stress that would lead the board to start a wind-down.
• Scenarios. A realistic description of how the firm could fail, including a severe but plausible stress and the loss of a key bank or partner.
• Customer funds. How money held under safeguarding rules or as client money would be identified, reconciled and returned.
• Costs and resources. An estimate of the money, staff and time needed to close, and evidence the firm holds enough to cover them.
• Dependencies. Critical suppliers, banking partners, IT systems and outsourcing contracts that must keep running during the exit.
• Communication. How and when the firm would inform customers, regulators, card schemes and counterparties.

Payment and e-money firms hold customer funds but, unlike banks, are not covered by deposit insurance. Orderly exit therefore depends on accurate records and properly segregated funds. In the United Kingdom, the Financial Conduct Authority (FCA) expects every payment institution and electronic money institution (EMI) to keep a wind-down plan, and its Wind-down Planning Guide in the FCA Handbook describes what a good plan looks like. The Payment and Electronic Money Institution Insolvency Regulations 2021 created a special administration regime with the objective of returning relevant funds to customers quickly.

The FCA strengthened these rules after several failures in which customers waited months or years for their money. Safeguarding rules that took effect on 7 May 2026 require firms to keep a resolution pack, a set of documents an administrator could use to identify and return customer funds, in addition to the wind-down plan. Funds kept in a safeguarding account are meant to be ring-fenced from the firm's own creditors.

For banks, the equivalent tools are recovery and resolution planning. The Financial Stability Board's Key Attributes of Effective Resolution Regimes (2011) set the international standard. In the European Union, the Bank Recovery and Resolution Directive requires banks to prepare recovery plans while resolution authorities draw up resolution plans. In the United States, large banking organisations submit resolution plans, often called "living wills", under section 165(d) of the Dodd-Frank Act. These plans are meant to prevent a disorderly collapse that could trigger a bank run elsewhere.

Crypto regulation has adopted the same idea. Under MiCA (Markets in Crypto-Assets Regulation), a crypto-asset service provider (CASP) offering certain services must have a plan for orderly wind-down, and issuers of asset-referenced tokens and e-money tokens (EMTs) must keep redemption plans for paying holders if the issuer cannot meet its obligations. For each financial market infrastructure (FMI), the PFMI (Principles for Financial Market Infrastructures) require recovery or orderly wind-down plans and enough liquid net assets to carry them out.

A wind-down can also be forced from outside. When a regulator withdraws or refuses to renew an authorisation, it usually sets deadlines for stopping new business, paying out balances and continuing reporting. In regulated gambling, for example, an operator losing its gambling license may have to stop accepting deposits at once, let players withdraw within a set window and return remaining balances to accounts in the players' own names. In Brazil, where betting accounts are linked to the player's CPF (Cadastro de Pessoas Físicas), that number is the natural key for matching each balance to its owner.

Forced exits test the firm's banking stack as much as its plan. Partners tend to begin offboarding as soon as a licence is in doubt, and the firm must keep enough access to payment rails to repay customers. Obligations such as tax, anti-money laundering (AML) record-keeping and regulatory enforcement for past conduct normally survive the end of the licence.

Plans are only as good as the records behind them. Failures in the payments sector have often revealed safeguarding shortfalls or poor reconciliations that no plan could fix. Plans can also understate how quickly banking partners and staff leave once trouble is public. Supervisors therefore increasingly test plans, ask for evidence of the resources set aside and review them during routine supervision rather than accepting a document written once and filed away.

• FCA Handbook: Wind-down Planning Guide (WDPG)
• Federal Reserve: Resolution Plans