Banking license - security of funds


(Graham - Mental health professional) #1

I’m now using my card instead of my current bank debit card - official.

With that in mind can you remind me where we are in respect of fund security FCA-wise?


#2

Until the current account is launched there is no FCSC cover. That deposit protection scheme is only for bank accounts not pre paid cards


(Alex Sherwood) #3

Following on from Richard’s comment, here’s the confirmation from the Monzo team that the current accounts will have FSCS protetction.


#4

When the current account are launched they will initially be sole user accounts with £85,000 permanent cover and £1,000,000 short term cover for things like property transactions or handling the estate of a deceased relative (see https://www.fscs.org.uk/what-we-cover/questions-and-answers/qas-about-temporary-high-balances/ for details of this higher limit)

If in the event Monzo do decide to introduce joint accounts at some point they have a different limit of £170,000.


(Graham - Mental health professional) #5

Ah, so what level of protection does exist for prepaid cards, please?


#6

There is no scheme covering pre-paid cards. However the funds in most pre-paid card companies tend to be kept in ring-fenced accounts separate from company accounts and liabilities


(Alex Sherwood) #7

Monzo’s terms currently state that:

The card is an e-money product, and as such it is not covered by the Financial Services Compensation Scheme. In the unlikely event that Wirecard Card Solutions Ltd becomes insolvent, your funds may become valueless and unusable, and as a result you may lose your money.


#8

yes Alex…that is if Wirecard become insolvent, but if Monzo become insolvent, have they separated off the customer funds behind a ring-fence like a few other companies have?


(Alex Sherwood) #9

Good point, yes they have.

From Monzo’s ethics page -

Before we become a fully licensed bank, your deposits are held by Wirecard Card Solutions Ltd. in a ring-fenced client-monies account.


(Graham - Mental health professional) #10

Thankyou chaps - as usual excellent advice.


(system) #11

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