Customer cash frozen as Wirecard's UK business ordered to stop operating
The UK subsidiary of scandal-hit German fintech business Wirecard has been ordered to immediately stop all regulated activities by the UK’s top consumer watchdog.
The Financial Conduct Authority (FCA) said on Friday that Wirecard Card Solutions Limited must immediately halt all regulated activities and is forbidden from offloading any assets or funds. Customer cash will be frozen.
The announcement threw many of Wirecard’s UK customers into crisis. ANNA Money, a freelance business account provider, told users on Twitter to “urgently” withdraw their money.
Dionne Griffith, a spokesperson for ANNA Money, said the Wirecard suspension came “without prior notice” and the company “had to quickly update our 20,000 customers with this announcement.”
“The main point is to reassure them that their card details and their funds are still secure,” Griffith said, promising a further update later on Friday.
Card management service Curve, which has around half a million customers, told users to carry a backup card as Curve would be “suspended with immediate effect.”
A spokesperson for Curve said: “In April, Curve announced we would bring more processes in house such as card issuing and e-money and move away from a reliance on Wirecard.
"This disruption is expected to last for a limited time only and we are focussed on completing this transition as quickly as possible."
The freeze follows the collapse of Wirecard’s German parent company on Thursday, following an accounting scandal. The company, once worth over €20bn (£18bn, $22bn), collapsed after admitting to a €1.9bn hole in its balance sheet. Former chief executive Markus Braun has been arrested by authorities in connection with the case, while the company’s former chief operating officer is currently being pursued by prosecutors.
READ MORE: Embattled payments firm Wirecard collapses into insolvency
“Our primary objective is to protect the interests and money of consumers who use Wirecard,” the FCA said in a statement.
“Following last week’s news of €1.9bn 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. 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 FCA said customers whose funds are affected should contact Wirecard directly.
Balances are not protected under the UK’s Financial Services Compensation Scheme but the terms of Wirecard’s UK licence require it to separate customer funds from the company’s balance sheet in order the safeguard it.
