Challenger bank Pockit has been forced to freeze all customers’ accounts because of the Wirecard scandal and tells users to go to local welfare assistance schemes if they can’t pay for their essentials.
Two weeks ago auditor Ernes & Young (EY) refused to sign off on German FinTech giant Wirecard’s financial statement for 2019 after it discovered a €1.9bn ($2.1bn) shaped black hole in its finances. Just a few days later the payment company admitted that the money may not have existed at all in the first place.
In the days that followed, Wirecard’s CEO Markus Braun stepped down from his role and was later arrested, accused of having inflated the company’s total assets and sales volumes. Braun was later released on a €5m ($5.66m) bail. Then, on Thursday June 25, Wirecard filed for insolvency. And that was when the troubles for UK FinTechs really started.
Early in the morning of Friday June 26, the FCA ordered Wirecard UK to freeze all of its assets and services. The regulator’s action affected the businesses depending on the German company’s services. Companies like Curve, ANNA Money and Holvi have all had to suspend parts of their services. The neobank Pockit is another business that has been affected.
“As a regulated business we legally need to comply with [the FCA’s] request, as a result, this means that Pockit accounts will remain inaccessible for a short period of time until the FCA removes the restrictions,” Pockit said. “The action is not related to Pockit however Pockit is currently dependent on Wirecard for operating the Pockit card.”
This means that the challenger bank’s card can’t be used to make any purchased, whether online or offline, or to be used to withdraw money from ATMs.
The startup also attempted to calm customers by telling them that their money was “being held by Wirecard in a ring-fenced designated account with Barclays”, meaning that “in the event of a Wirecard going bust [customers] are protected.”
Pockit said that it “fully understand the urgency of this matter,” adding that it was working with the FCA “to reactivate all accounts as quickly as we can and reunite you with your money.” However, it was reluctant to give a timeframe of then the issue would be resolved, but reiterated that it is “working round the clock and will give regular updates to our customers regarding operations returning to normal.”
“We sincerely apologise for the distress this is causing,” Pockit said, adding that it was “working with a reputable UK based payment provider to enable a seamless switch over process.”
The company also explained that it had been unable to give any warning to its cusotmers as “Pockit was not made aware that any restrictions would be imposed by the FCA until June 26. This is why we were unable to give you any notice to withdraw your funds prior to restrictions being imposed.”
Pockit added, “We understand the consequences of this event are critical for you and are doing everything we can to solve this as quickly as possible.”
The neobank told any customers struggling to pay for essentials “might be able to get help from a local welfare assistance scheme.”
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