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Comment by wikibob | Hacker News Reader

Monese is not a bank. They are not covered by the Financial Services Compensation Scheme (Equivalent to the Federal Deposit Insurance Corporation FDIC in the USA).

They are an "Authorised Electronic Money Institution" like PayPal. If they go bankrupt, you will lose all your money.

https://register.fca.org.uk/ShPo_FirmDetailsPage?id=0010X000...

I'd strongly recommend you open a real banking account.

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"If they go bankrupt, you will lose all your money " is not entirely true, according to Monese's FAQ:

https://support.monese.com/hc/en-gb/articles/115002002229-Is...

"Unlike banks we do not re-invest customer funds and have to keep all customer money separate to our own company finances. We are required by Regulation to Safeguard all funds received from Monese customers. This guarantees that even in the unlikely event that Monese is no longer in business, all of our customers would receive 100% of their balance back"

This assumes that no-one has criminally run off with the money, lost it down the back of the sofa etc. It's also not clear under what law their customer funds are not treated as company assets, in which case if they're bankrupt, the creditors get first dibs.

The point of the FSCS is that it doesn't matter what happens to your bank. The government will pay you back up to £85k of what you had there.

So while it's not a given that if they go bankrupt you "will" lose all your money, just that you "may" lose all your money. :)

> It's also not clear under what law their customer funds are not treated as company assets, in which case if they're bankrupt, the creditors get first dibs.

Insolvency events are covered by section 24 of Part 3 of the Electronic Money Regulations 2011.

"24. (1) Subject to paragraph (2), where there is an insolvency event—

(a) the claims of electronic money holders are to be paid from the asset pool in priority to all other creditors; and

(b) until all the claims of electronic money holders have been paid, no right of set-off or security right may be exercised in respect of the asset pool except to the extent that the right of set-off relates to fees and expenses in relation to operating an account held in accordance with regulation 21(2)(a) or (b) or 22(1)(b).

(2) The claims referred to in paragraph (1)(a) shall not be subject to the priority of expenses of an insolvency proceeding except in respect of the costs of distributing the asset pool."

So, these funds would be kept secure from other creditors and paid out as a priority.

https://www.legislation.gov.uk/uksi/2011/99/part/3/crosshead...

In any case, unless their mattress is big enough, they still need to put that customer money somewhere, possibly in a bank who can re-invest customer funds.

Hmm, good to know!

According to their site 100% of my funds should be covered since they are required to hold any client funds in a separate account which they cannot use for anything at all.

https://support.monese.com/hc/en-gb/articles/115002002229-Is...

Not sure what the implications are with that vs being a "real bank"

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