Regulation 23 of the PSRs 2017 require us to safeguard client relevant funds by placing those funds in a segregated client account, separate from our own business accounts, in those cases in which we need to temporarily hold funds for the purpose of the execution of a payment transaction.
These accounts are designated as Safeguarded accounts and protected in the event of our insolvency and are also protected from any interest in, recourse against, or right of set-off from the financial institution where Universal Partners FX Ltd (UP) holds client funds.
Safeguarding is the obligation to identify and keep client funds segregated and protected from all other funds that the business may receive for the purpose of the provision of a payment service, segregating the funds as soon as they are received and moving the funds to a safeguarding account, or if the funds for a payment transaction are still held by the Firm after receipt. The obligation commences as soon as funds are identified as relevant funds and are received by UP (and stops when funds are remitted to and received by the clients’ recipient).
For a Payment Services institution, relevant funds are deemed as follows: Funds received from, or for the benefit of, a payment service user for the execution of a payment transaction; and funds received from a payment service provider for the execution of a payment transaction on behalf of a payment service user (the client). The funds are no longer deemed relevant once the Firm has remitted them to the recipient and the Firm can reasonably assume that the funds have reached the recipient’s bank account.
Where UP can identify that unclaimed or unallocated funds have been received from a client to execute a payment transaction then these funds will be identified as relevant funds and safeguarded accordingly.
Funds that are not deemed relevant include the following:
- Deposits for forward contracts, until they are allocated for a payment instruction following the forward contract* being settled.
- Margin calls on forward contracts until they are allocated for a payment instruction following the forward contract being settled.
- Unclaimed or unknown funds not related to the payment service – Where UP can identify that unallocated funds have not been received from a client to execute a payment transaction, then UP will use reasonable endeavours to identify the customer to whom the funds relate but these will not be considered relevant funds for the purposes of regulation 23 of the PSRs 2017.
Where client funds are subject to safeguarding, that means that client funds benefit from the arrangements put into place to protect these funds in the event of insolvency of the Firm. Client funds are held in segregated accounts and moved to safeguarding accounts if the monies are still with the Firm on the day after receipt.
Our safeguarding obligations are outlined in Chapter 10 of the FCA Approach document which can be found here
*Please note our Foreign Exchange Services (including our non-regulated Forward Contracts) are non-regulated activities and therefore, they are outside the scope of the PSRs 2017 and our API licence with the FCA.
What happens if funds get lost in transit i.e., we send them out, but funds don’t arrive as expected? What processes do we have in place to monitor this?
If funds do not arrive within expected time frames a ‘trace’ can be placed by our Operations Team to track the progress of the payment. Occasionally payments can be delayed by intermediary banks and in extreme cases may be returned if the bank account details are deemed invalid. Our approach to incorrectly executed transactions are outlined in our Terms & Conditions in sections 14.2, 14.3 and 14.4 which can be located here.
If Universal Partners were to go out of business, how would our clients get their money back?
In the event of the Firm going out of business, a liquidator would be appointed to handle the distribution of the Firm’s assets. The client funds are managed through processes designed to ensure that daily, the value and identification of client funds is calculated and checked against actual cash held. The liquidator, in line with UP’s Wind-Down Plan, would use the records to ensure that all client funds are returned to the underlying clients as first priority to all other creditors (other than in respect of the costs associated with the liquidation which if they exceed any funds held for the business may mean the liquidator can recover their costs from client funds).
This does also mean that, as the liquidation and reconciliation process is underway, it could take longer for monies to be refunded and some costs could be deducted by the liquidator of the Firm during the distribution process.
Are Universal Partners clients covered under the Financial Services Compensation Scheme (FSCS)?
No – As an API Firm, we are not in scope of the FSCS. As an API firm UP is required to safeguard the entire value of relevant client funds with an Authorised Credit Institution. Subject to any insolvency costs, clients may get most, if not all, of their money back.
How does an API differ from a bank?
An Authorised Payments Institution “API” is an authorisation by the FCA which allows Financial Institutions to provide Payments Services but cannot hold client funds without a payment instruction. A Bank is a deposit taker regulated by both the FCA and Prudential Regulation Authority (PRA).
An API Firm’s client money rules are governed by the safeguarding rules outlined in the FCA’s Approach document which can be located here.
What is the difference using Universal Partners and the Currency Cloud for payment services?
Universal Partners FX Ltd is authorised by the Financial Conduct Authority as an Authorised Payment Institution under the Payment Services Regulations 2017 and utilize safeguarded accounts with their financial institutions.
The Currency Cloud Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 for the issuing of electronic money and utilise safeguarded accounts with their own financial institutions.
Universal Partners’ main business function is to provide money remittance services that require an FX conversion. As the Firm secured banking partnerships with authorised banking institutions in the UK, Universal Partners have developed their own platform to provide payment services independently, but there may be some clients that we continue to provide with payment services that are serviced by the Currency Cloud. This may be due to open existing payment instructions or clients based in jurisdictions other than the UK, which fall outside of our remit. The Currency Cloud platform will continue to support the provision of the services to provide money remittance that requires a FX conversion.
For further information, you may also contact your dedicated account manager who will be happy to help.
How can our customers make a complaint?
Full information on Universal Partners Complaints handling procedure can be found here