Across the whole world, because they are not banks, the customers of FinTech businesses, are not protected by the relevant deposit insurance scheme.
The kind of protection that China demands is not enforced in many countries.
The UK’s FCA, in its trendy bollocks way of communicating, talks of “safeguarding.” It means “protecting.”
In the announcement about Loot, it said “We are in contact with Wirecard Card Solutions [i.e. the UK subsidiary of Wirecard in Germany] to ensure that Loot Financial Services customer funds continue to be safeguarded and that customers are given sufficient information on how to access their funds.”
So it’s clear. A year ago, at the very latest, the FCA was aware of the risks that were faced by customers of Wirecard’s associated businesses in the UK. By extension, they were also aware, or should have been, of the risk that the FinTech sector presents when it’s allowed to take – and use or export – deposits or does it in breach of regulations.
The notice also implied that the FCA was concerned that funds held by Wirecard and obtained through associated businesses in the UK were not hypothecated i.e. ring-fenced in the case of insolvency. The same extension applies.
In the present case, the conditions under which the UK company is allowed to continue to trade effectively disassociate it from the collapsed German parent.