I’m not sure what the funding criteria were for the fund but by all counts 2 of the 8 signatory banks did not contribute to the Fund from an article I found.
Apparently Starling is one of those, it might be in relation to size of consumer base?
here ?
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For what it’s worth, I once saw it explained in a really interesting way (I can’t remember where I saw it - I feel as though it was an interview):
The legacy banks have been pushing for this code, and championing the “paying into the pot” from which your compensation will be paid, because they know they can’t compete with the technology advances of challenger banks.
Essentially, challenger banks would be “penalised” because they’re better at detecting fraud, but will still be contributing to a pot that protects legacy banking customers, who weren’t properly protected by their own bank.
I can totally see it from that perspective - if Monzo are x times better at detecting fraud than Nateast (fictional bank), because they can develop their tech for identifying newer types of fraud, quicker, why should they contribute to a pot that ultimately will give legacy banks less of a reason to catch up with those advances? I’m totally surprised that Starling have signed up.
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I’d imagine the thinking behind Starling signing up may have been to create situations like the OP came in with. IE: Starling is ‘better’ than Monzo because they’re signed up to this and Monzo isn’t.
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That’s it in a nutshell. The system as it is designed at the moment gives legacy banks no incentive whatsoever to improve their fraud detection systems. Why spend money building something better when you can just carry on as you are and other banks will end up paying your costs for you?
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At the moment the long-term funding model hasn’t been agreed. The founding signatories (the ‘big’ 7 banks) are covering all funding up to 31/12/2020 and have done since the code launched.
I’d imagine being part of the code is required to contribute to deciding how the future funding model would work, and I would expect any fintechs signed up (just Starling right now) to be arguing their case.
That said, Monzo apparently committed to signing up last July but haven’t done so yet. Many other banks have also said they will sign in time (perhaps once the long-term funding arrangements are in place?).
I must admit, I feel pretty safe with Monzo looking after hard earned wonga! I trust them more than the high Street banks. As I’ve seen on most community forums, people start posts for the sake of starting posts…with no hope of a resolution! I’m first to here about this app protection thingy. But all the banks protection in the world won’t save you,
if your not mature enough for a account. Harsh reality is, if it’s too good to be true, DONT send any money. I have heard of countless stories about people blaming the banks for their own fault. Just use a bit of common sense.
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Monzo’s stance is explained in this interview.
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This problem is entirely avoidable if you just don’t be so gullible and take everything with a grain of salt.
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This was the one - thanks!
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