FCA to Scrutinize Money Apps and Digital Banks over Consumer Data

Friday, October 26th, 2018

They have less complicated funding application procedures, provide you with the cash instantly and their loans are easily accessible from the comfort of your couch. Perhaps that explains why Money apps and Digital banks have become very well-liked among different borrowers.

But recently, the watchdog— The Financial Conduct Authority— announced plans to review new-age banks and money apps due to the rising concerns about the transparency of some of the services they offer. The FCA protects the consumer from exploitation by internet merchant account U.K holders.

Mobile banking and third-party payment services have gained popularity over the past years. They include well-established vendors like PayPal to surfacing counterparts like Monzo, Tandem and Starling.  We have also seen several smartphone apps which allow their uses to manage their finances roll out.

Beginning Jan. 2018, under the new “Open Banking” laws, these apps and banks have been able to access a client’s real current account data. But supervisors fear that the lack of regulation of most of these services may pose a threat to customers. Plus there are concerns that some of these institutions fail to make it clear to customers that their confidential data could be sold on and used for other fraudulent purposes.

The watchdog also said it would investigate how these digital firms market their services to consumers. It highlighted currency exchange services as one the sectors where service providers could be misleading their customers.

Samantha Seaton works with Moneyhub, a popular mobile app. She agreed that most app users were charged with unnecessary fees after signing up.

“In our sector, innovation is hampered by the opaque, multifaceted marketing of services that leaves consumers unaware of the charges and fees they should pay,” she said.

“The arrival of Open Banking at the start of 2018 will improve the sector by allowing customers to regain control of their confidential data. Regrettably, there are already some “download for free” apps that sell on a users’ information or earn commissions on recommended products.”

In conclusion

As the Financial Conduct Authority takes care of digital banking services and app providers, users must now be careful of the kind of applications they download online.