The Financial Conduct Authority (FCA) has said that Wirex has committed to making changes to comply with consumer rights laws in the UK.
Wirex Limited will amend its e-money contract and has promised the FCA that it will remove three contractual clauses regarding the firm's liability as a result of account suspension, compensation available to consumers and a clause that excludes commitments that may be implied by law.
This will bring it in line with the Consumer Rights Act 2015.
The watchdog took issue with a term in Wirex’s e-money contract that removed the firm’s liability as a result of account suspension.
This meant that Wirex would not be liable for any losses incurred by consumers in the event that the firm suspended a customer account in accordance with that term, regardless of the circumstances.
"We were concerned that this term was likely to be considered unfair because it could result in the firm refusing to pay compensation to consumers even where the loss was due to the firm’s fault, for example, if the firm suspended a consumer’s account in error," said the FCA.
The limitation of compensation available to consumers was another issue.
Here, a clause in the contract stated that the amount of compensation a consumer could receive from the firm in the event of a loss was limited to what the consumer had paid to the firm in the 12 months preceding a claim, and that if a consumer had not paid anything, no compensation would be payable.
The FCA challenged this because it would be expected that compensation payable to consumers would be based on the loss incurred, irrespective of what the consumer had paid to the firm.
"As such, we were concerned that the term could leave consumers with less compensation than they would be entitled to," the FCA said.
The third term that the regulator objected to included a paragraph that allowed Wirex to exclude any commitments that may be implied by law “to the extent that the firm was permitted to do so”.
Here, the FCA warned that this lacked sufficient transparency as consumers were unlikely to understand what this meant in practice.
Wirex falls in line
Going forward, Wirex has agreed with the FCA to remove these three terms from its e-money contracts from January 1, 2024.
Wirex, which had been using the terms since October 2021, also denied that they had been used to unfairly treat customers.
“The changes that Wirex Limited has committed to make to its contracts should ensure that consumers better understand the circumstances in which the firm is liable to pay compensation,” the FCA said.
Additionally, the watchdog stated that compensation will no longer be limited to how much consumers have paid to the firm in the previous 12 months, which should mean that customers receive appropriate amounts of compensation for their losses.
Wirex had not responded to a request for comment at the time of publication.