Wirecard: thousands of UK consumers blocked accounts linked to the German company

The Financial Conduct Authority suspended Wirecard Card Solutions’ operations on Friday after its parent company filed for bankruptcy in Germany following the discovery of a $ 2 billion hole in its accounts.

The FCA said it had made the decision for Wirecard “not to pay or reduce” any money, except on instructions from its clients. Wirecard Card Solutions provides technology and payment processing services to dozens of UK digital account and prepaid card providers, who have been forced to suspend services to customers.

“Our primary objective is to protect the interests and money of consumers who use Wirecard,” the FCA said in a statement. On Monday, the regulator said the company was making progress to address its concerns, but that it will not lift the restrictions until it is comfortable that “all clients’ money is safe.”

Startup customers like ANNA Money and Pockit cannot use their accounts to pay for purchases or withdraw money from ATMs. This has led the UK Department for Work and Pensions to set up dedicated help lines for people who depend on these accounts to receive government benefit payments.

Pockit, who says it’s for people who have been “ignored or rejected” by major street banks, has 500,000 clients, some of whom were due to receive child support on Monday.

The FCA said that people experiencing financial difficulties could get help from a local welfare scheme. “We are reaching out to the small number of claimants who we believe have been affected to make sure they have the support they need and can access their money as quickly as possible,” said a spokesman for the Department of Labor and Pensions.

ANNA Money, a commercial banking startup, contacted clients on Friday to tell them to urgently withdraw money from their accounts before they were frozen. That was too late for many. “We had no warning that Wirecard in the UK had a problem,” the company now tells customers on its website. “The details of his ANNA card and the money in his ANNA account remain secure, but unfortunately he is currently unable to access them.”

Wirecard files for insolvency after former CEO arrested in $ 2 billion scandal
He said Wirecard Card Solutions “repeatedly assured him” that his parents’ problems would not affect his UK operations. The company said it is talking to MasterCard (MOTHER) about changing ANNA cards to a new payment provider.

Curve, which allows users to spend money from all their accounts with a single card, had already restored some of its services on Sunday night. Its 1.3 million clients have accounts with other banks.

“The call I received at 9 am Friday was the worst a founder could hear: that our accounts would be closed imminently, through no fault of ours,” Curve founder and CEO Shachar Bialick said in a statement.

The company had started a long-planned migration out of Wirecard a few months ago, which accelerated over the weekend, transferring some services to Checkout.com and moving some at home, Bialick said. The changes were not related to Wirecard’s problems, a spokesperson told CNN Business.
Another Wirecard customer, online lender Morses Club, said Monday that his U account customer accounts had been temporarily frozen with users who could only view balances. The company said it was talking to the FCA to find out when clients could regain access to their funds, which were kept securely in an account with Barclays (BCS).
Mastercard and Visa reportedly reconsidered their relationship with Wirecard following an accounting scandal

Wirecard collapsed into insolvency last week after its auditor, EY, refused to sign the company’s financial statements, saying more than $ 2 billion was missing from its accounts. Markus Braun, CEO of Wirecard, who was arrested and later released on bail for € 5 million ($ 5.7 million), has suggested that the company could be a victim of fraud.

In accordance with the UK Electronic Money Regulations, Wirecard card services must close customers’ money in a separate bank account. However, these funds are not protected by the Financial Services Compensation Plan, which acts as deposit insurance in the event of bank failure.

Mastercard and Visa (V) They are reportedly reconsidering whether to allow Wirecard to continue processing payments on their networks.