Press Release – Regulators Are Failing To Supervise Firms Proactively And Ensuring Separation Of Client Money

Leading compliance and regulatory consultant, CEO of Complyport Paul Grainger, calls on lessons to be learnt from the collapse of Wirecard AG, “fundamental flaws” in the supervisory roles of regulators.

Wirecard AG went into administration in Germany,  the FCA in the UK instructed the UK arm, Wirecard Card Solutions, to freeze all payments on 26 June. This meant that many thousands of consumers who have payment cards issued by firms that utilise Wirecard  Card Solutions in the UK could not make payments. The freeze was lifted by the FCA with effect from 30 June.

Paul Grainger CEO of Complyport Ltd said:

“It begs the question whether regulators are actually supervising such firms proactively and ensuring separation of client money (ie, consumers’ money) from the firm’s money. Also why did regulators not know for certain that funds belonging to clients/ consumers which should be held separately from the firm’s own money in accounts with approved banks were actually held? It is not rocket science to require firms to do reconciliations and prove to regulators and auditors that funds that are claimed to exist actually do exist. Perhaps such firms should be making more frequent and more detailed returns to regulators and regulators should be more proactively monitoring to ensure in future such verification is available.

Whilst it appears there may have been a massive fraud perpetrated at Wirecard AG, it raises serious questions about supervision and regulation of the financial services sector when firms can assert that they have money that never existed and fool both auditors and regulators.”

The FCA action meant consumers were left in limbo for a period of 4 days (including a weekend) during which they could not access their own money.   This regulatory action is very likely to have caused many consumers distress and inconvenience. It is not clear that the FCA had any hard or reliable evidence that Wirecard Card Solutions was unable to make such payments.

Paul Grainger CEO of Complyport said:

“The fact that FCA lifted the payments freeze within 4 days suggests there was no such problem and that perhaps FCA acted in panic.   The FCA may argue that such action was designed to prevent loss to consumers, but this looks to be a failure in the financial supervision system for such an extreme measure to be required. Surely, FCA and BaFIN in Germany should have been supervising Wirecard and its subsidiaries (including Wirecard Card Solutions in the UK) at such a level that it was known that there was no threat to consumers’ money.”




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Notes to Editors:


  1. To arrange an interview with Paul Grainger CEO of Complyport Ltd please email or call John Kaponi
  2. Complyport is a leading compliance and regulatory consultancy providing bespoke, practical solutions for all manner of regulated firms both in the UK and overseas. Our specialist compliance services expertise can either sit alongside your current compliance teams or, for an independent solution, we can bring our team in-house.
  3. Established in 2002, Complyport combines former regulators, industry practitioners and legally qualified individuals to offer our clients an unparalleled, professional team.