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Tens of thousands locked out of accounts linked to Wirecard

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The City watchdog has ordered Wirecard to freeze UK customer funds and to cease all regulated activities which has had a knock on effect on other prepaid card firms and digital banks.

The Financial Conduct Authority (FCA) has imposed a number of requirements on payment processor Wirecard Card Solutions Limited in the wake of its revelation last week that 1.9bn had gone ‘missing’.

Wirecard has been ordered not to dispose of any assets or funds, told that it must not carry on any regulated activities and must set out a statement on its website informing customers of this.

The FCA said: “Our primary objective is to protect the interests and money of consumers who use Wirecard. Following last week’s news of €1.9bn missing from the accounts of the German company, Wirecard, we 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.

“We have been working closely with Wirecard UK and other authorities over the past few days to take action that protects consumers. We are continuing to do this and on 26 June, we 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.”

The move has had a knock on effect on other firms which use Wirecard services.

Anna Money which offers a business account for startups and small businesses and depends on Wirecard to process payments, wrote to customers urging them to withdraw money as the FCA announcement was expected.

A statement on its website read: “We’re very sorry to say that your Anna card and account have been temporarily suspended with immediate effect. We expect the suspension to be lifted – the inability to use your account and card is temporal, and we are working to restore it as soon as possible. Your Anna card details and the money in your Anna account remain safe and secure – but unfortunately you cannot currently access them.”

Digital bank Pockit also confirmed it is affected.

A statement on its website read: “The FCA has imposed a number of requirements on our card issuer Wirecard Card Solutions LTD today.

“As a regulated business we legally need to comply with their request and Pockit accounts will remain inaccessible for a short period of time.

“Wirecard Card Solutions LTD is regulated by the FCA and is required to safeguard funds of Pockit customers.

“We are working with the FCA to reactivate all accounts as quickly as we can.”

A tweet from digital bank Revolut, stated it switched all of its top-ups away from Wirecard so Revolut cards will work as usual, with money safeguarded in trusted global banks.

The FCA advised UK Wirecard customers to contact Wirecard or their card provider directly if they have e-money with it, use Wirecard to make payments or if their prepaid card has stopped working.

Any UK customers who receive benefits into their Wirecard account should contact the Department for Work and Pensions.

The FCA added that funds aren’t protected under the Financial Services Compensation Scheme (FSCS) as this doesn’t apply to electronic money or payment services.

However, the FCA can take ‘safeguarding’ steps to protect and return customer money if a firm was to fail.

It added that Wirecard is required under regulations to maintain appropriate measures to safeguard customer money. “Adequate safeguarding arrangements which are compliant with the regulatory requirements are a condition of Wirecard’s ongoing FCA authorisation”.

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