Influencer and Mastercard-backed FinTech Lanistar is not allowed to operate in the UK, the Financial Conduct Authority has warned.
“This firm is not authorised by us and is targeting people in the UK,” the City watchdog warned on Wednesday. “Based upon information we hold, we believe it is carrying on regulated activities which require authorisation.”
The regulator advised customers that the customers of the company to “be especially wary of dealing with this unauthorised firm” and to find out “how to protect yourself from scammers.”
Lanistar, which offers a debit card for the Gen-Z and millennial market, has been promoted with Instagram posts by footballer Kevin de Bruyne and model Demi Rose.
However, the startup is pushing back against the FCA’s warning.
“Legal and regulatory compliance are central to Lanistar’s business and we confirm that we are not providing financial services or products without the FCA’s authorisation,” the company said in a statement.
“We will be partnering with firms that are authorised by the FCA to provide financial services or products. We are in the process of contacting the FCA to clarify the position and will be requesting that the notice is removed.”
Whether or not Lanistar will be able to convince the financial watchdog that all of its services are above board, it has thrown a spanner into the company’s rollout.
Earlier this week, the startup announced that it was set to take on UK customer registrations for its Volt payment card and to promote it via 3,000 influencers on social media.
Jason Bates, one of the original founders of of both Starling Bank and Monzo and who now heads 11:FS said he felt sorry for the Lanistar team.
“Feeling bad for [Lanistar],” he tweeted. “With Visa, GPS, Jumio, and others they have the right partners (with licences to offer emoney / prepaid cards) [but] they really didn’t get how [financial services] product launches are very different from non-regulated apps.
“The original Starling and Monzo landing pages probably had as much effort put into the footer (regulatory information and a clear description of what was being offered) as the rest of the page. You can’t just can’t bypass that.”
Emily Nicolle, reporter at Financial News, stated on Twitter that the issue the FCA has with Lanistar could potentially be because it had yet to complete due diligence on using Modulr as its provider for e-money accounts.
“In the case of Lanistar, it has not completed our due diligence process, so it does not have any right to refer to Modulr or suggest that it has the right to provide regulatory services on behalf of Modulr,” the company said in a statement seen by Nicolle.
“Despite not having undertaken full due diligence at Modulr or the required approval as an EMD agent of Modulr by the FCA, Lanistar issued communications referring to Modulr without our consent. Until and if Modulr approves Lanistar as a partner, submits an EMD agent registration to the FCA and the FCA approves the registration, Lanistar are not able to use, or claim to use, Modulr services nor reference Modulr as a partner.”
The Lanistar entered into a partnership with Mastercard in June that would enable it to issue the card, the Financial Times reported.
When announcing the deal, Mastercard noted that Lanistar would also offer online influencers the opportunity to invest in the business.
At the same time, Lanistar announced that it had raised £15m in investments, predominantly from family members, Sifted reported.
Lanistar announced in early November that it had signed a partnership with Global Processing Services that would see the later power the alternative banking company’s debit card.
“[GPS] is set to provide the issuer processing technology behind Lanistar, and we can confirm that no live account or card has been issued by GPS for the Lanistar programme,” Joanne Dewar, CEO at GPS, said in a statement sent to FinTech Global. “GPS operates in line with card scheme rules set out by Lanistar’s chosen scheme, Mastercard and are working with Lanistar’s issuing partner, who operate under its license issued by the Financial Conduct Authority (FCA) and Mastercard. We are in direct contact with the FCA to seek the clarification required.”
Lanistar raised £2m in seed capital in March, 2020. The funding round was supported through private financing and family contributions.
Modulr did not return calls to comment to this story.
The story has been updated to include the comments from GPS.
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