Banks: Coronavirus

(asked on 13th October 2020) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment his Department has made of the effect of the covid-19 pandemic on the UK challenger banks sector; and if he will make a statement.


Answered by
John Glen Portrait
John Glen
Paymaster General and Minister for the Cabinet Office
This question was answered on 21st October 2020

The German merchant acquirer Wirecard AG entered administration in June. It has a UK subsidiary, Wirecard UK, which is authorised and regulated by the Financial Conduct Authority (FCA). The FCA ensures that payments firms make suitable safeguarding arrangements in compliance with the regulatory requirements as a condition of firms receiving FCA authorisation, protecting client money.

Shortly after the entry into administration of Wirecard AG, the FCA temporarily blocked the distribution of funds from the UK subsidiary, Wirecard UK, to ensure client monies were properly safeguarded. Wirecard UK is being wound down but the business will continue to trade while alternative arrangements are being made with its card providers.

Payments in the UK have seen rapid change over recent years, including the growth of firms like Wirecard UK. These changes offer exciting opportunities for UK businesses and consumers, with many making payments faster and cheaper. However, and as will always be the case with a rapidly changing technological landscape, they also present new challenges and risks.

Given the pace of change, a HM Treasury led review of the payments landscape was announced in June 2019. A Call for Evidence is the first stage in this review, open until 20 October.

The Government recognises the crucial role of challenger banks in providing customers with more choice and is committed to maintaining competition in financial services. We recognise the COVID-19 crisis has been difficult for many firms, including challenger banks, and we continue to engage regularly with the sector to understand how firms are being impacted.

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