Fintech
Restrictions on onboarding new clients have been lifted at UK fintech Modulr
Banking as a Service (BaaS) provider in the UK Module its temporary ban on acquiring new clients has been lifted, but it is required to send a warning to the financial regulator when it does so.
The collapse of US BaaS provider Synapse has increased attention on BaaS, with some critics questioning its business model.
Modulr, which has an EMI license and is supported by PayPal, provides payment services for companies such as Revolut, Sage and Ripple.
By using Modulr’s technology, its customers avoid the need to build their own payment infrastructure, regulate themselves and operate a payment network.
Modulr, founded in 2016, is backed by investors including PayPal Ventures, Blenheim Chalcot, Frog Capital and Highland Europe.
In October last year, the Financial Conduct Authority (FCA) ordered Modulr to stop onboarding some new clients due to regulatory concerns, Sifted reported.
The ban meant it could not take on new “partner” customers, who used its card or account payment services.
The decision comes in conjunction with regulatory changes, including new rules on consumer protection in financial services and new rules on push payment fraud.
However, according to the FCA, the temporary ban has now been lifted.
The FCA states:
“The Company has agreed with the Authority that it will not engage any new agents and/or distributors without first providing written notification to the Authority with at least 10 working days’ notice.”
Modulr said it has made “improvements” to its onboarding and oversight processes.
Modulr said:
“Following a temporary pause in onboarding new Agent and Distributor (A&D) partners in the UK, we have made a number of improvements to our A&D partner onboarding and oversight processes.
“Following implementation of these changes and extensive internal and external testing and review, we have agreed with the UK Financial Conduct Authority (FCA) to resume onboarding new A&D partners, subject to advance notice to each A&D partner.”
Earlier this month it was reported that German BaaS company Solaris would face financial penalties if it did not improve its financial controls, according to German financial regulator BaFin.
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