Revolut has come under fire after a BBC Panorama investigation told the story of a man who had £165,000 taken from his business account with the firm, and is yet to be refunded.
The e-money company said it cannot comment on the case as it is being looked at by the Financial Ombudsman Service.
In July, Revolut was granted a banking licence after a three-year wait for approval, though as of yet, its conversion is not yet complete.
If you are a customer, or are looking to become one, here is what you need to know about opening an account with them.
What is Revolut?
Revolut is a digital-only financial institution that doesn’t have a physical branch. It is also not yet a bank which means some rules apply differently to it.
Is my money protected if I am a Revolut customer?
The UK has a financial protection scheme called the Financial Services Compensation Scheme (FSCS). This entitles customers compensation of up to £85,000 if a financial services firm fails.
FSCS protection means customers get back their money – whether or not the bank actually has that cash itself to return to customers, as the funds come from the FSCS itself.
Currently, because Revolut is not yet a bank, deposits are not protected by the FSCS. They are instead protected by something called “safeguarding”.
With e-money institutions, funds instead are kept in a safeguarding account, meaning the provider – in this case Revolut – cannot lend it out to others and you should get your money back in case of a collapse. However, MoneySavingExpert.com has warned that this “could be minus some admin fees”.
The exception to this is Revolut customers who had money put in a Revolut Savings Vault – that money is deposited with a third-party bank, which held it on a saver’s behalf and was FSCS protected.
The situation is likely to change in the future, though Revolut needs to exit its mobilisation period first. Once this happens, funds will be protected by the FSCS.
There are other firms operating in the UK as e-money institutions rather than banks, with Wise being a prominent example.
Do the rules on fraud reimbursement apply to Revolut?
Yes. New rules on fraud reimbursement from the Payment Systems Regulator came into play last week, and these still apply to Revolut, even though it is not yet a bank.
This is because the rules are also applied to payment firms – anyone using a system known as faster payments or Clearing House Automated Payment System (CHAPS) is covered.
Introduced last week, they cover something known as authorised push payment (APP) fraud, whereby someone is tricked into sending money to a fraudster.
Under the rules, payments that fall under an APP scam category are considered for reimbursement, providing certain tests are met.
These tests are designed to ensure that payees have not been negligent, for example, by ensuring they conducted basic checks before making payments.
Companies must ensure fraud victims are compensated up to £85,000 within five days under the new rules, and these rules apply to Revolut as well as banks.
What do I do if I think I have fallen victim to an APP scam?
As soon as you realise you have fallen victim to a scam, the Payment Systems Regulator says you should immediately contact your account provider to report it.
They will take all the relevant information from you and will “consider your case for reimbursement,” according to the PSR.
Your bank will investigate the issue and get back to you to let you know the decision they have made, but if you are still unhappy with their response, you can take the matter further by referring it to the Financial Ombudsman Service (FOS).
You can do this by using the FOS website.
What has Revolut said?
A Revolut spokesperson said: “We are sorry to hear of any instance where our customers have been targeted by ruthless and sophisticated criminals. Revolut takes fraud and the industry-wide risk of customers being coerced by organised criminals, incredibly seriously.
“As a UK Payment Service Provider, Revolut abides by the same regulatory standards as any ‘high street bank’ in combating fraud. We of course would refute any suggestion that we do not, nor wish to, abide by these standards.”
It added: “We recognise a small number of our customers have had experiences with Revolut which have fallen short of our expectations. We do not recognise this as the experience held by the vast majority of customers who continue to enjoy Revolut’s products and services.
“Nevertheless, there will always be more to do to tackle this multi-industry issue and we will continue to work towards reducing fraud rates further.”