UK fintech Wirex Limited found by FCA to fall short of the Consumer Rights Act 2015. Emoney firm agrees undertaking with regulator

CompliReg helps UK and EU fintech become authorised and works with them on regulatory, governance and compliance issues. Led by Peter Oakes, please get in touch HERE

One for #emoney firms to take note of whether authorised in the UK or Ireland, and indeed throughout the EU.

This relates to the UK FCA finding that, in order to protect consumers, three clauses in an authorised and regulated regulated #fintech company's T&Cs (in the EU referred to as the Framework Contract) fell short of the Consumer Rights Act 2015.
 
On 4 October 2023, the FCA published a Notice of Undertaking (the “Undertaking”) agreed with Wirex Limited (FRA #902025), citing the following T&Cs with:
 
1) Excluding liability as a result of account suspension. This provision excluded the firm’s liability for any losses suffered by consumers, should the firm suspend their account in accordance with the provision, irrespective of the circumstances. The FCA considered this to be unfair under the Act as it permitted the firm to deny consumers compensation to which they may otherwise be entitled due to such a suspension, even if the firm had caused the relevant loss.
 
2) Limitation of compensation available to consumers. The T&Cs purported to limit the sum of compensation a consumer was entitled to receive in the event of a loss to the sum the consumer had paid to the firm in the year prior to making the claim. The FCA considered that this term derogated from the position under national law, as it limited a consumer’s right to obtain the proper amount of compensation in the event of a contractual breach by the firm. The FCA considered that the firm could not reasonably assume a consumer would have agreed to such a term in individual negotiations, because a consumer would most likely expect that if the firm had done something wrong and caused them loss, they would be entitled to commensurate compensation regardless of what they had paid to the firm.
 
3) Exclusion of commitments that may be implied by law. The T&Cs included a term that enabled the firm to exclude any commitments that may be implied by law, to the extent that it was permitted to do so. The FCA was concerned that this provision lacked adequate transparency, as consumers were unlikely to be aware of the extent to which the firm would be able to exclude their liability under obligations implied by law.
 
Wirex Limited has:

• agreed to remove all 3 terms from its e-money contracts with consumers from 1 January 2024;
• agreed to not use these 3 terms (or similar terms with the same effect) in its future contracts with consumers;
• told the FCA that the terms have been in use since October 2021;
• told the FCA that it has not relied on the 3 terms in an unfair way in practice;
• fully cooperated with the FCA in resolving its concerns.

According the FCA's register, Wirex Limited has been an "Authorised Electronic Money Institution" since 17/08/2018.

Further reading:

• FCA published a Notice of Undertaking agreed with Wirex Limited
• Peter Oakes Linkedin Post