Prepaid card app Loot goes into administration – your rights
Digital prepaid card provider Loot has gone into administration – and if you're a customer, your cash isn't protected by the Financial Services Compensation Scheme. Yet the firm's administrators have insisted all deposits are safe, and customers are currently able to withdraw cash as normal.
Loot, which says it has more than 200,000 customers, bills itself as an app-based current account – essentially, it's a digital prepaid card which offers features similar to many app-based banks, such as spending insights. But it stresses on its website that it is "not a bank" and adds "your account isn't covered by the Financial Services Compensation Scheme", which protects savings of up to £85,000 per person, per UK-regulated financial institution.
Regulator the Financial Conduct Authority (FCA) hasn't issued any official guidance on what customers should do now. Yet Loot says customers can continue to use their accounts and withdraw cash as normal.
As it's an 'e-money provider', Loot has to follow e-money rules which say your money must be ring-fenced, and Loot says customers' cash is protected and held by Wirecard Card Solutions Limited – the company that issues Loot cards.
Unfortunately, as the FCA won't comment on what customers should do, it's unclear what action they should take. If you have cash in a Loot account, you should be able to withdraw your money as normal.
What do the administrators say?
Henry Shinners, joint administrator, said: "While the Loot offering is one that has attracted a lot of interest and praise, the business wasn't yet generating sufficient revenues to meet its ongoing costs and unfortunately the board could not secure the additional funding needed.
"We are in advanced talks with other providers operating in this space to take over the services provided by Loot with a view to securing continuing, uninterrupted service to its customers. In the meantime, we want to reassure all customers that their deposits are safe and that they can continue to access the service."
We've contacted Wirecard Card Solutions Limited to ask what customers of the company should do, and we'll update this story when we know more.