Some of you may remember this financial institution from several years back; it allowed you to hold funds in multiple currencies. It started up properly in 2017 and then went bang in 2019 with the administrators being called in. Today I received a detailed update following a High Court hearing last month regarding distribution of customer funds.
Ipagoo was not a bank; rather it was an e-money issuer. It was also a relatively small company with customers throughout Europe. At the time they went down the drain I held no funds with them.
The two parts from the email that particularly stood out are:
While I am not suggesting all e-money companies that may cease trading via administration will only return between 50% and 60% of clients’ money, based on this individual failure “safeguarding” customer protection appears particularly weak. Buyer beware.
Thanks for flagging this up, I wasn’t aware of this particular failure. Definitely an eye opener for anyone considering moving all their banking to a start-up.
Reading an FT article from the time it appears that the FCA were investigating prior to their failure and found they were not adequately customer balances from working capital - and had ordered them to cease regulated activity until they put this right. It appears they couldn’t, and thus fell in to administration.
That is at least some comfort to those who chose to keep balances with the more mature e-money players, like Revolut, that there is scrutiny ensuring balances are protected.
Definitely highlights the lack of protection with e-money institutions.
Caveat Emptor with the holding/transacting of funds with Monese, Wise, Revolut & others.
I agree in principle, don’t leave money outside of full FSCS protection, but presumably those e-money brands have undergone the same scrutiny which caused Ipagoo to go pop and have proven that customer funds are adequately protected?
Revolut Vaults are covered by FSCS as they are held by partners. Go to your Vault, tap the Settings icon, then “Rate information” to see where the funds are being held. Mine are all with Paragon Bank PLC.
It’s the money in current accounts that you’d lose, I think. Pretty easy to keep current balances at a low level.