Ah, OK. Technically, it’s my understanding that EDIS would still require national protection schemes, but I’m not too sure.
Obviously by the time that this is implemented that time the UK will have left the EU anyway, so FSCS would still exists.
Either way, that’s why I said “FSCS (or equivalent)”. Obviously, as it stands, all EU countries have the equivalent, including Lithuania, where Revolut will be licensed. I’m not too fussed about who is providing the deposit protection (i.e. whether FSCS, or the Lithuanian equivalent, or indeed EDIS once it’s up and running), but as it currently stands Revolut is not covered by any, and that’s a big issue for me personally
Revolut is in process of getting full banking licence from Lithuania which means they would be able to offer same sort of protection like any other bank, I guess.
Says in their announcement blog;
Your money will be protected up to €100,000
One of the key benefits of obtaining a banking licence is that customer funds will be protected under the European Deposit Protection Scheme (EDPS).
The EDPS will cover your funds up to the first €100,000 or about £85,000 in the UK, which means that you can safely and confidently store higher balances in your Revolut account.
A very interesting thing in their blog is that they want to build their own payment processer so no more GPS in not too distant future for Revolut customers
In-house payment processing
Around the same time as we hope the banking license application to be accepted, we should have built our own in-house payment processor that will allow us to offer our users a much more reliable service, significantly reducing the risk of outages that is not in our control.
Over the last two years, we have worked with some fantastic third-party providers who have helped Revolut find its legs, but we believe that now is the time to manage our payment processing internally as we approach 1m users and expand Revolut globally.
Unfortunately, in a year’s time the UK will no longer be a member of the European Union, and it is unclear if customers in this country will remain eligible for protection.
In relation to say UK Fintech account holders What about those that have accounts but live here on a temporary basis or actualy reside permanently overseas (exPats))
Will this be a problem in reverse
Doesn’t the Deposit Protection Scheme protect deposits without regards to the depositor’s nationality/residence?
@SC95 This is different from passporting which in essence allows EU banks to provide banking services in this country without needing a UK banking license.
Nationality is not a problem here but if your bank is from an EU country like N26, Bunq and Revolut in future, then it means UK protection scheme does not apply. I am just making a logical assumption of course. Someone with more knowledge would probably explain it better.
Well, but since Revolut wants to be licensed in Lithuania, FSCS would never apply, regardless of our membership of the Union. It’s the Lithuanian Deposit Protection Scheme that would apply, and to my knowledge (far from an expert in the area, though) European Deposit Protection Schemes are based on the bank’s location/license, not on the depositor’s nationality/residency/location.
Whether Revolut will continue to be able to offer banking services in the UK using a Lithuanian license is indeed a different question, and quite uncertain at this time, I think.
(And, of course, the same thing applies to Bunq, N26, etc, unless they are deemed to have branches in the UK, and your deposits are deemed to have been made in these branches, in which case FSCS would apply.See Mirow’s comment But post-brexit a UK banking license would most likely be needed for that.)
It’s an interesting one that no doubt could be debated to death
I ask the question as I somehow had the feeling that a lot of foreign visitors to the UK prefer Fintech banking as it is easier to apply for an account in respect to residency criteria etc
Of course I may be completely wrong here
In the UK FCA rules require the ringfencing of all emoney client funds in an account at a third party institution. Not sure if it is the same in all EEA countries but certainly some have similar requirements. While not the same as standard EU €100,000 (£85,000) cover it does none the less still provide some level of protection.
this is not true. They can have branches but it still not covered by the UK scheme. The cover is based on license. If the branch is covered by a passported license then the respective country’s scheme applies. The UK scheme would only apply if the branch had been registered directly in the UK bypassing any passporting provisions.
Thanks. I have worked for a bank that had a passported license and been a customer of another bank that had a passported license so I am keen to see how the UK Government tackle banking after Brexit, particularly as they have made a few negative comments about not giving preference to the financial services sector despite the extent of it’s contribution to the national exchequer!
Prime Minister said in her speech a few weeks ago that we will not be part of European banking passport as it is now.