PIF uncovers disbursement policies that lead to the exclusion of e-money and payment services resulting in denial of choice for consumers and small business owners
London, 12 January 2021 – PIF, the not-for-profit industry body representing e-money and fintech payment firms, has today called on the UK government to support the use of non-PRA regulated accounts for the pay out of government-derived loans, grants and other funds alongside traditional bank accounts.
PIF is acting in response to a number of cases whereby its members’ customers have applied for grants or loans, some in respect of COVID-19, but also others, and been told that these disbursements cannot be paid into an account that is not regulated by the Prudential Regulation Authority (PRA).
In one such case, PIF was told by a distributor of a government-derived grant that they were unable to pay out to a non-PRA regulated account as they had “no guarantee that they perform in-depth checks on prospective account holders”. The same distributor of public money stated that they require applicants to have an account regulated by the PRA as they “have confidence that traditional banks have adequate processes to perform the appropriate checks on applicants and obtain evidence of their identity on opening a bank account”.
PIF Chairman Paul Swinton commented:
“We are extremely concerned that non-PRA regulated firms are being specifically excluded from supporting their customers by what appears to be a misunderstanding of the application of the relevant laws. The businesses we represent provide financial products and services that are regulated by the UK’s Financial Conduct Authority and are subject to exactly the same rules and regulations as traditional banks when it comes to verifying the identity of their customers.”
Non-PRA regulated firms that provide accounts, bank payments and other services to consumers and small business owners are required to identify and verify customers and ultimate beneficial owners in line with their obligations under the Money Laundering and Terrorist Financing (Amendment) Regulations 2019 (MLR 2019).
PIF Executive Director Diane Brocklebank said:
“We have been led to believe that a number of distributors of public money remain unaware of the stringent rules and regulations that apply to non-PRA regulated accounts, to the extent that beneficiaries are being advised to open an additional account with a PRA-regulated entity in order to receive funds.”
PIF has warned that if the perception that non-PRA regulated accounts are regulated differently to traditional bank accounts persists, this will result in:
- A reduction in the provision of alternative business accounts and services from the market
- Alternative providers being unable to operate as anti-competitive barriers such as these are being created and upheld
- Significantly reduced competition in the market
- A significant restriction in market growth and the stifling of innovation within the industry
Paul Swinton continued:
“The UK Government has consistently supported and championed fintech, yet it is our view that disbursement policies adopted by some distributors of public money will result in newer market entrants being placed at a competitive disadvantage through no fault of their own, even though they comply with the appropriate KYC and AML regulations.
“As the UK continues to contend with the economic challenges of COVID-19, it’s imperative that our members can continue to play a vital role in the nation’s recovery. These are the same firms that are making it easier, safer, and faster for the hardest hit to access and manage their money effectively.”
PIF has also raised concerns that the exclusion of non-PRA regulated firms from the payout of government-derived funds is causing needless delays to the payment of vital loans and grants to small business owners who have been severely impacted by the ongoing pandemic.
Notes to Editors
PIF is the not-for-profit industry body representing regulated e-money and payment firms that operate in the high-growth prepaid and fintech sector. In today’s increasingly competitive and highly regulated marketplace, PIF has become a vital industry ally as it works to help payment and e-money firms thrive, with compliance front and centre. It does this through its proactive engagement with regulators, policymakers, government and the media, promoting the positive impact of the sector and the positive difference it makes to the financial lives of consumers and businesses.
To learn more about PIF and the benefits of becoming a member, visit www.paymentsinnovationforum.org
T: +44 (0) 7736 971986