[Editor’s note: This is a guest post from Ryan Weeks, formerly with Dow Jones and AltFi, covering fintech. This is part three of a four part series (here is part one and part two) he is writing for us on the UK fintech market in the run-up to LendIt Fintech Europe.]
The accounting scandal at German payments company Wirecard shook the global fintech sector this summer, but it also had a tangible impact on the customers of UK fintech companies that had relied on Wirecard’s services.
Years of dogged reporting by the Financial Times came to a head in June, when Wirecard admitted that €1.9bn in cash was missing from its balance sheet, prompting a collapse in its share price. In roughly a week the company went from being valued at $14bn to filing for the German equivalent of bankruptcy.
On 26 June, the Financial Conduct Authority froze Wirecard’s UK arm, Wirecard Card Solutions Limited. This meant the firm could not dispose of any assets or funds, could not carry out any regulated activities and had to issue a statement on its website clarifying that.
The FCA’s intervention temporarily prevented thousands if not millions of UK customers from accessing cash held in a number of financial apps, including current account providers Curve, Pockit and U Account.
“The primary objective of these requirements was to protect the electronic money funds of consumers in safeguarded accounts. It also had the effect of preventing consumers from withdrawing and making payments with those funds,” said the regulator in a statement.