Safeguarding
Safeguarding
Your account with us is an e-money account
An e-money account can look and feel like a traditional bank account. As a result, you might think that money held in your e-money account and money held in a bank account is protected in the same way.
In fact, they are both protected, but in different ways.
How banks protect money
Banks are required to be part of the Financial Service Compensation Scheme (FSCS). The FSCS acts like an insurance policy for bank accounts and pays out up to a maximum of £85,000 per eligible person, per bank, building society or credit union, and up to £170,000 for joint accounts, in the event of the bank or building society becoming insolvent.
How Talkremit protects my money
Talkremit is an e-money institution, not a bank and, like nearly all other digital remittance providers, protects your money through a process known as safeguarding.
This means that your money is kept separate from Talkremit’s own money by being held in a segregated bank account.
Unlike the FSCS, safeguarding applies with no financial limit per customer or account, which means all of your money within your Talkremit account is protected.
Unlike the FSCS which is more like an insurance scheme, safeguarding relies on Talkremit implementing safeguarding correctly (and we are therefore required to have annual audits to make sure we are safeguarding properly).
In the unlikely event that Talkremit were to go out of business, the return of your money might take longer than an FSCS claim because the distribution would be handled by the administrator or a liquidator.
What is e-money?
When you send us money to top up your e-wallet account we give you the value to remit. The money held in your account is known as ‘electronic money’ or ‘e-money’. While this may sound similar to what a bank does when funds are received into a current account, we are not a bank and therefore:
- we do not take your money as a deposit to use for our own purposes or lend to other customers;
- your e-money is not covered by the Financial Services Compensation Scheme (FSCS).
To ensure your money is safe we follow a process known as ‘safeguarding’ which is a regulatory requirement for all Electronic Money Institutions (EMIs). In this process we keep your money separate from our own money and place it in a safeguarding account with a bank. We have an independent expert check that we are compliant with our safeguarding obligations on an annual basis and the expert’s report confirming this is available to the FCA on request.
How do we protect your money?
In the event of us going out of business, an insolvency practitioner would be appointed to return the funds we have safeguarded to our customers. This means you would get your money back less any administrative charge deducted by the insolvency practitioner for distributing the money to customers.
How does FSCS cover differ from safeguarding?
FSCS protects consumers together with small businesses, limited companies and charities (that meet its eligibility criteria) when certain authorised financial services firms (such as a UK authorised bank) fail and they cannot return your money to you. FSCS is a service funded by those financial services firms who are covered by it. FSCS provides compensation only up to £85,000 per eligible person, per bank, building society or credit union or up to £170,000 for joint accounts. This means if you have money in multiple accounts with banks, building societies or credit unions that are part of the same group (and share a banking licence) the FSCS treats them as one bank, whereas all the funds held in an e-money account are safeguarded and the full value (minus administrative costs applied by the insolvency practitioner) will be returned to you in the event that we go out of business. Because of the insolvency procedure it may take longer (as compared to an FSCS claim) for your money to be returned to you.
Want to find out more?
You can find out more about the main differences between banks and e-money institutions from the FCA’s website: https://www.fca.org.uk/consumers/using-payment-service-providers.
If you have any further questions in relation to this, please email us at [email protected] or you can call us on 0207-788-3009.