Hundreds of thousands of customers are cut off from their cash as watchdog freezes British arm of collapsed German payments firm Wirecard
- Several fintech companies who use Wirecard systems have been suspended from allowing customers access to their money until further notice
- UK customers may not be able to touch their money on payday or use cards
- German company Wirecard collapsed on Thursday with debts of £3billion
Hundreds of thousands of customers may not be able to access their money on payday or use their cards due to a financial regulator shutting down the British arm of German company Wirecard.
It was announced on Thursday that crisis-torn Wirecard had collapsed with debts of more than £3billion in Germany's worst accounting scandal and UK customers are now suffering the effects.
The Financial Conduct Authority announced the UK subsidiary, Wirecard Card Solutions Ltd based in Newcastle, must stop all activities and must not allow customers access to their money.
Wirecard chief exec Markus Braunwas forced to resign after auditor EY refused to sign off the payment systems provider's 2019 accounts
The cessation could mean two million people are unable to get into their accounts.
An inability to access cash could also have a tremendous effect on businesses which may already be struggling financially due to the pandemic.
The financial technology company's collapse comes a week after auditor EY refused to sign off the payment systems provider's 2019 accounts, forcing out chief executive Markus Braun and leading Wirecard to admit that £1.7billion of its cash probably did not exist.
Braun was arrested on suspicion of market manipulation and inflating financial numbers earlier this week before being freed on bail.
There are now concerns that the UK branch of the company could also have been involved in financial misconduct.
Millions of people have been left unable to get to their money as businesses which use Wirecard's systems have also been forced to freeze.
Companies which use Wirecard's systems were forced to freeze customers' access to their accounts
Fintech business Pockit, backed by Sir Alex Ferguson, has shut off the accounts of more than 500,000 customers until further notice after misinforming its customers that the German scandal would not affect them.
The company sells itself on helping people who have 'been ignored or rejected by high street banks' and could leave some vulnerable customers without access to much needed funds.
Curve, which has more than one million customers, has told its users its services are 'temporarily suspended with immediate effect'.
It confirmed it is on its way to 'migrating away from Wirecard' and expected the disruption to last for 'only a limited period of time'.
Joining the list of businesses hit by the scandal is Anna Money, a business account and tax app for small businesses which has more than 20,000 clients, but it assured its customers that their card details and the money in their account remained safe and secure.
The FCA said: 'Following last week’s news of €1.9 billion 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.
Customers using fintech companies to manage their finances, including, Pockit, Curve and Anna Money, have all been temporarily affected
'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 watchdog said it had been working with the Department of Work and Pensions (DWP) to arrange help for people who receive benefits into the accounts.
Any money customers put into the accounts affected is not covered by the Financial Services Compensation Scheme (FSCS), which protects customers of financial services firms that have failed.
However, their money should be stored in third-party accounts with Barclays and Citi.
The FCA's intervention has prevented Wirecard staff from siphoning off money to the collapsed German arm.
https://news.google.com/__i/rss/rd/articles/CBMihAFodHRwczovL3d3dy5kYWlseW1haWwuY28udWsvbmV3cy9hcnRpY2xlLTg0NjU1ODcvQ3VzdG9tZXJzLWN1dC1jYXNoLXdhdGNoZG9nLWZyZWV6ZXMtQnJpdGlzaC1hcm0tY29sbGFwc2VkLUdlcm1hbi1maXJtLVdpcmVjYXJkLmh0bWzSAYgBaHR0cHM6Ly93d3cuZGFpbHltYWlsLmNvLnVrL25ld3MvYXJ0aWNsZS04NDY1NTg3L2FtcC9DdXN0b21lcnMtY3V0LWNhc2gtd2F0Y2hkb2ctZnJlZXplcy1Ccml0aXNoLWFybS1jb2xsYXBzZWQtR2VybWFuLWZpcm0tV2lyZWNhcmQuaHRtbA?oc=5
2020-06-27 08:53:31Z
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