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FCA: fintech firms must clarify non-bank status

Author: ICAEW Insights

Published: 20 May 2021

E-money accounts can be a convenient and accessible way to use banking services, but the financial services watchdog has warned providers they need to make clear they are not a bank.

The Financial Conduct Authority (FC) recently wrote to the Chief Executives of e-money firms to remind them of the need to be clear in how they present themselves to customers. 

E-money accounts and the “business banking services” offered by electronic money institutions can appear an attractive option, particularly at a time when it has been difficult to open a business bank account. E-money firms can also provide a valuable service to consumers who have difficulty in opening a traditional bank account and may otherwise be financially excluded. 

Businesses and individuals who use e-money accounts should hear from their account provider by the end of June with information about how their account is protected by safeguarding, and a reminder that the protection of the Financial Services Compensation Scheme does not apply. 

“The language used by some firms can be confusing to businesses and consumers who may be looking for a new bank account, but are attracted by the convenience of and services associated with some e-money accounts,” said Philippa Kelly, Director of ICAEW’s Technical Strategy Business Group.

“It’s important to understand your business’s or client’s needs and weigh up the risks and benefits of e-money services. These can include considerations about the practical limitations associated with such accounts, as well as broader concerns about how balances are protected.” 

If you would like to know more about the pros and cons of e-money accounts, or relevant considerations for talking to clients about using e-money services, ICAEW has produced this helpsheet.

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