UK’s FCA places partner onboarding restrictions on embedded payments platform Modulr
The UK’s Financial Conduct Authority (FCA) has placed partner onboarding restrictions on embedded payments platform Modulr as the firm works “to ensure our governance, systems and controls reflect the scale of the business and regulatory requirements” following a period of growth.
FCA imposes partner onboarding restrictions on Modulr
Authorised as an electronic money institution (EMI), the London-based company provides businesses with the infrastructure to build payments directly into their own platforms, without having to build their own payment systems.
It agreed with the regulator this month to not onboard any new agent or distributor partners without its prior written consent.
An EMI like Modulr typically enlists agents or distributors to issue electronic money on its behalf to ultimately expand the reach of its payment services.
When approached by FinTech Futures about the matter, a spokesperson from Modulr says that agent and distributor (A&D) partnerships has been an area of “concentrated growth” for the company, and this growth “brings particular risks and challenges to oversee and manage”.
“As a result of the scale and speed of growth we have agreed with the FCA to pause the onboarding of new A&D partners to ensure our governance, systems and controls reflect the scale of the business and regulatory requirements,” the spokesperson says.
“This doesn’t impact any of our existing partners, the onboarding of new direct customers or growth of our European business.”
For the duration of the restrictions, which came into force on 4 October and for which an end point has not been defined, the company adds it will also “take the opportunity” to future-proof the business in light of recent regulatory changes concerning the Consumer Duty, APP fraud reimbursements and financial promotions.
