UK regulator imposes requirements on Wirecard’s authorisation
The firm must not dispose of any assets or funds and must not carry on any regulated activities.
The UK Financial Conduct Authority (FCA) today announces that requirements have been imposed on Wirecard’s authorisation.
Wirecard Card Solutions Limited (FRN 900051) is authorised and supervised by the FCA to issue e-money and provide payment services including, issuing e-money onto prepaid cards. Wirecard is authorised under the Electronic Money Regulations 2011 (the EMRs) and its activities are also subject to requirements under the Payment Services Regulations 2017 (the PSRs).
Today, the FCA imposed a number of requirements on Wirecard including, that the firm:
- must not dispose of any assets or funds;
- must not carry on any regulated activities;
- must set out a statement on its website and communicate to customers that it is no longer permitted to conduct any regulated activities.
The UK regulator explains that there are ongoing events in Germany concerning companies closely linked to Wirecard. Wirecard’s parent company, Wirecard AG based in Germany is currently the subject of law enforcement interest and insolvency proceedings. Wirecard AG is not supervised by the FCA.
Following last week’s news of €1.9 billion missing from the accounts of the German company, Wirecard, the FCA immediately placed requirements on the firm’s UK business so that it should not pay out or reduce any money it holds for its customers except on their instructions. The regulator has been working closely with Wirecard UK and other authorities over the past few days to take action that protects consumers. Today, the FCA took additional measures to require the firm to cease all regulated activities in order to further protect customer money. This now means customers money cannot be accessed.
Customers are advised to contact Wirecard or their card provider directly and may do so using the contact details on the Wirecard website or their card provider’s website.
The money of Wirecard’s customers are not protected by the Financial Services Compensation Scheme (FSCS) as it only applies to certain types of activity which does not include issuing electronic money or payment services.
However, Wirecard is required under the EMRs to maintain appropriate measures to safeguard customers money. It does this by holding it separate from its own money in accounts with banks (or another credit institution). Effective safeguarding arrangements are critical to help ensure that customers’ money is protected and returned if a firm fails. Adequate safeguarding arrangements which are compliant with the regulatory requirements are a condition of Wirecard’s ongoing FCA authorisation.
