FCA has written a Dear CEO letter asking e-money firms to write to their customers to explain how their money is protected. It is worried that these firms’ promotions to customers give the impression that their services are like traditional bank accounts, and do not point out the differences between e-money accounts and bank accounts – most particularly that the FSCS does not apply to e-money accounts.
FCA feels its portfolio strategy letter and safeguarding guidance of 2020 made FCA’s views of the risks of consumer misunderstanding clear, but it feels many firms are still not making adequate disclosures. It notes the requirements of BCOBS on accurate communications that explain the risks, and also notes that firms are giving a misleading impression of which products and services are FCA regulated.
It is now calling on firms to write to customers within the next 6 weeks to remind them how safeguarding works and how there is no FSCS protection. It wants this to be a standalone communication, made in a method appropriate to the firm’s business model and customer base.
FCA will carry out a follow up exercise to assess the action firms have taken on this, and also on a request to review existing promotions to ensure they meet regulatory standards.