the local entity. in this regard, i would like to emphasise the importance of the independent nonexecutive director ( ined ), and i am conscious that some of you here today will be ineds or aspiring ineds. the ined is an important role in delivering challenge at board level, providing independent and objective perspectives and specific expertise. in fast growing firms with a high level of ambition, such challenge is valuable – and dare i say vital. protecting your customers funds i would like to spend a little more time on another basic expectation – namely that firms will first and foremost focus on protecting their customers'funds. and indeed, as many of you will know, this has been a specific supervisory focus of ours in the payments and e money sector – and will remain so for the years ahead. that you must keep your customers'money safe and segregated should not be news to anyone. and that it is a fundamental responsibility to safeguard the funds you have been entrusted with should go without saying – and is precisely what your customers assume and expect but unfortunately it does have to be said, with our supervisory experience pointing to continued instances of firms failing to comply with basic statutory obligations around protecting users'money. as we have communicated before, and hope we have made clear, we have no tolerance for weaknesses in safeguarding arrangements – and expect firms to prioritise protecting and safeguarding their customer's funds. to repeat, this means we expect : firms to have robust, board approved, safeguarding risk management frameworks in place which ensure that relevant users'funds are appropriately identified, managed and protected on an ongoing basis. this includes the clear segregation, designation and reconciliation of users'funds held on behalf of customers. firms should be proactive in ensuring that the design and operating effectiveness of their safeguarding frameworks is tested on an ongoing basis. 4 / 8 bis - central bankers'speeches they must notify the central bank immediately of any safeguarding issues identified. and take mitigating and corrective measures immediately to ensure that users'funds are safeguarded where, in exceptional circumstances, issues are identified. they must also investigate and remediate on a timely basis the underlying root cause of the safeguarding issue ( s ). 6 these messages on governance, risk management, safeguarding, and resilience are not new. indeed our supervisory expectations and priorities for the fintech sector have been broadly constant over the last few years. 7 constant as they are fundamental ; un

organizations. accordingly, to enhance risk sensitivity without increasing regulatory burden, staffs of the agencies are drafting an advance notice of proposed rulemaking suggesting possible targeted adjustments to our existing regulatory capital rules. this advance notice will be published close to the publication of the basel ii notice of proposed rulemaking so that the industry and others can view the proposals side - by - side. we expect that the comments we receive on each of the proposals will help us refine the proposals and identify competitive issues between the alternatives. in closing, i would like to underscore our commitment to maintain an ongoing dialogue with all members of the banking industry - regardless of their potential basel ii status - and to continue providing equal information to all parties interested in basel ii implementation. this pertains to the entire scope of basel ii - including the proposed u. s. rule, the qualification process, home - host issues, and potential competitive effects. if we can improve on the manner in which we carry out those tasks, please let us know.