1. OVERVIEW
This document was last updated on 25 September 2024
A major requirement of FCA Regulation is the Safeguarding of Client Funds. This was put in place to protect consumers from the effects of financial loss in the case of a financial services provider ceasing to trade. The relevant regulations state that all client funds must be segregated from all other funds, such as corporate, and must be held in a designated Client Fund Account that cannot be used for any other purpose. Alternatively, client funds can be covered by a suitable insurance policy.
Process
GWP has opted to segregate customer funds on receipt, rather than take out an insurance policy. All customer funds are held in a Client Fund designated bank account until such time as they are required for settlement of a customer payment instruction. GlobalWebPay utilises bank accounts in Lloyds Bank for receipt of clients funds. GlobalWebPay also maintains liquidity at various Payment Providers for the payment of client transfers to recipients. These Payment Providers operate under contract with GlobalWebPay and are responsible for parts of the process, under the oversight of GlobalWebPay.
All customer funds received for onward transmission to the recipient are required to be cleared funds prior to processing and are accompanied by a prior transfer request from the customer. Funds are not retained by GlobalWebPay or a Payment Provider for an extended period of time and are generally processed to the recipient within one working day, normally in hours.
GlobalWebPay maintains funds in a number of currencies. In these cases, the GBP funds are utilised to purchase foreign currency which is also deposited straight into Client Fund Accounts at Payment Providers. At all times, GlobalWebPay holds client funds which are sufficient to meet all liabilities to customers.
Receipt and Segregation of Funds
GlobalWebPay only receives funds from customers by bank transfer or debit card. The receiving bank account details used will refer to the Client Fund Account, enabling direct payments into that account. Funds will remain in the Client Fund Account until such time as they are utilised by GlobalWebPay to process the customer instruction.
The Client Fund Account will not be used for any other purpose.
Bank transfers arrive into the Client Fund Account and are therefore cleared funds. With regard to debit card payments, Checkout.com (our Card Processor/Acquirer) deposits the funds into the Client Fund Account as soon as card authorisation is obtained.
On receipt of funds, Lloyds or Checkout.com sends a notification that the funds have arrived, providing the relevant reference numbers from the payment. This enables GlobalWebPay to match up the funds with the payment instruction.
Multiple bank accounts may be used for the purposes of safeguarding client funds in order to facilitate different currencies and regions, and as mentioned above, GlobalWebPay will, at all times, hold sufficient funds to meet all of its liabilities to its customers.
Holding Of Funds
As stated above, the bank account used for the holding of customer funds has to be designated as a Client Fund/ Segregated Account by the holding bank. This is a regulatory requirement and is necessary to ensure that no other transactions are processed through that account and that no persons other than the relevant customers have any claim on those funds.
This has been put in place to ensure consumer protection in the case of the failure of the company. GlobalWebPay fully adheres to this requirement. The only transfer activity between the client fund accounts and GlobalWebPay’s corporate accounts is the retrieval of fees from customer transactions which are owed to GlobalWebPay for the services provided. These fees do not impact on the liabilities GlobalWebPay has to its customers.
Reconciliation of Funds
The reconciliation of Client Funds is a key area of regulation, and a robust process and tight controls exist to give comfort to the business that it is able to discharge its financial responsibilities to our customers.
GlobalWebPay holds full records of all payment requests from customers, including those that are outstanding. Once funds are received, they are matched up with the outstanding order and processed. Reconciliation is only required on payments that are outstanding once funds are received. GlobalWebPay is fully aware of which customers these affect, and these situations would relate to payments that have not yet been processed by a payment partner, and are queued within the system ready to be sent. The balance in the Client Fund Account represents these customers. Sufficient records of the Client Fund Accounts are maintained and a full breakdown of transactional data is held by GlobalWebPay for comparison when necessary. Instructions given by customers that have not yet been funded do not form part of the reconciliation process as no funds have been received, and therefore do not require segregation.
Should any inconsistency arise as a result of the reconciliations process, GlobalWebPay will immediately identify the reason for the inconsistency in the figures, and correct it as soon as possible.
Payment of Funds
Once funds have been received to the Client Fund Account, GlobalWebPay identifies the relevant customer from the payment reference number and matches the deposit to their order. Once all of the details have been checked, GlobalWebPay issue a payment instruction back to a Payment Provider to process the transaction. These requests are then queued within the Payment Provider system for processing - dependent on the currency involved. These are made within one working day.
GlobalWebPay operate a dual-approval policy to all payments. Two members of the GlobalWebPay staff are required to review payments prior to processing. Any payments deemed to be fraudulent or unusual are not sent for processing until an investigation has been completed.
Occasionally GlobalWebPay receive funds that cannot be allocated to an instruction. These only relate to bank transfers as card transactions would fail unless all correct required data is provided. GlobalWebPay investigate these payments to locate the relevant customer, using sending bank details, amounts and outstanding instructions to locate the customer. In these cases, the funds are moved to an ‘unapplied account’ until such time as the customer can be located, at which time the payment is processed.
In addition to this, customers occasionally overpay when making the transfer in respect of an order. In these cases, all overpaid funds are returned to source, be that card or bank account.
Reimbursement
The currency of any reimbursement is £ Sterling (GBP)
The reimbursement period in case of failure is within 30 working days
Reimbursement exclusions
Reimbursements cannot be made if there is a suspicion of the incoming payment being associated with money laundering or fraud or is subject to any investigation by an agency involved in law enforcement.
2. CONCLUSION
This document highlights GlobalWebPay’s approach to the safeguarding of client funds. The Board is responsible for incorporating and maintaining this policy and ensuring it effectively manages GlobalWebPay’s regulatory and business requirements as the service evolves.