FCA Removes Onboarding Restrictions For Modulr

After a temporary ban was lifted, UK payments provider Modulr can now start accepting new customers again. However, it must notify the financial regulator before taking on any new clients.

The failure of US Banking-as-a-Service (BaaS) provider Synapse has made people pay more attention to BaaS. Some critics are now questioning whether the business model is effective.

The FCA Has Now Lifted The Temporary Ban On Modulr

Backed by PayPal and an EMI license, Modulr provides payment services to firms such as Ripple, Revolut, and Sage. With Modulr’s technology, these firms don’t need to set up payment systems, deal with regulatory requirements, or operate a payment network.

Investors in Modulr, which was established in 2016, include Highland Europe, Blenheim Chalcot, Frog Capital, and PayPal Ventures. Last October, the Financial Conduct Authority (FCA) instructed Modulr to stop accepting some new customers due to regulatory issues, according to Sifted.

Because of the ban, Modulr could not start working with new “partner” clients, such as “agents and distributors” who use its payment services for cards or accounts. This decision was made in response to new regulatory changes, which included updated consumer protection rules across financial services and new laws against push payment fraud.

According to the FCA, the temporary ban on Modulr has been lifted. The FCA states that Modulr has agreed to only take on new agents or distributors if giving the Authority at least ten business days’ notice in writing first.

According to Modulr, it has enhanced how it handles and oversees new partners. The firm noted that after a temporary halt in welcoming new Agent & Distributor (A&D) Partners in the United Kingdom, the organization had introduced various improvements to its processes.

Modulr Has Agreed To Resume Onboarding With FCA’s Conditions

Modulr stated that after making these changes and conducting thorough internal and external testing, it had reached an agreement with the UK’s Financial Conduct Authority (FCA). The firm could now start onboarding new Agent & Distributor (A&D) Partners again, but only after giving advance notice to each new partner.

According to reports from earlier this month, Solaris, a BaaS company from Germany, could receive financial penalties if it does not upgrade its financial controls. BaFin, the German financial regulator, gave this alert.

The Financial Conduct Authority (FCA) regulates financial firms like independent financial advisers and asset managers. The Authority can create, investigate, and enforce rules to manage the financial services industry.

According to the update, the Authority focuses on three objectives supporting its strategic goal. It aims to protect consumers and enhance the integrity of the United Kingdom’s financial system.