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Find out more'What happens if my international money transfer provider goes bust?
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I’m looking to use a money transfer company to send money overseas.
Do I have any protections if the company goes bust?
A Which? Money member
'At least £120,000 should be safe'
Bill Wilkinson-Hoy, Which? money expert, says…
Your protections depend on the company you use. In all cases it's vital you use an firm authorised by the Financial Conduct Authority, which you can check on their register.
Overseas payment providers in the UK tend to fall into one of three categories: authorised payment institutions, electronic money institutions and banks.
Banks protect your money via the Financial Services Compensation Scheme (FSCS). This covers up to £120,000 per person per institution (recently increased from £85,000), although some banks share licences.
Money transfer firms must separate client funds from their business funds
Authorised payment institutions and electronic money institutions must protect your money using the Financial Conduct Authority’s safeguarding scheme.
The overwhelming majority of customer funds are safeguarded through the segregation method, which means money transfer firms must separate client funds from their business funds.
Unlike with banks, which are under the FSCS limit, should the money transfer company go out of business, there’s no limit to the amount you can get back.
Provided the firm is safeguarding correctly, you should recover the entirety of your funds. Customer funds are reimbursed before money is distributed to other debtors.
- Find out more: how to save on overseas transfers
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