Paypal UK FOS Changes

Birdsnest451

Quite dumb, but I am not sure who that applies to

It would appear as Paypal joined the FCA Temporary Permission scheme in order to continue trading in the UK after Brexit and are withdrawing on 1 December 2022.  This means that they are withdrawing from the compulsory rather than voluntary scheme which was intended as an interim measure pending full registration.

My complaint was upheld by the Financial Ombudsman with compensation of £100 after they insisted on a photo-ID when I had surrendered by driving licence for medical reasons.   Paypal claimed that there were suspicious attempts to transfer money following their "improved" security scheme that relied on cookies that my browser deletes on exit.  Following the Ombudsman's intervention they wanted a birth certificate despite not having my date of birth.  After the decision Paypal transferred £100 to my account but as they still needed proof of identity I can't close the account or transfer the money.  The proof required was a paper driving licence  or utility/council tax bills that show my date of birth.

The Ombudsman does have the power to refer Paypal to the FCA but if they don't intend to conduct their business in the UK after November will they care?

DullGreyGuy

Paypal, more accurately PayPal (Europe) S.à r.l. et Cie, S.C.A, is not a UK based company and but under the EU rules it was able to operate in the UK market under passporting rules. As an EU company it didnt have to be covered by the FOS as rights would exist with the Luxembourg equivalent.

Brexit then, unfortunately, happened meaning passporting rules ended and so PayPal joined the FCA TP regime which allows it to continue operating in the UK market however the requirements of that scheme is that UK complaints fall under the jurisdiction of the FOS.

There will be a potential negative impact to consumers if an issue occurred before 1 Jan 2021 but you dont refer it to the FOS until after 1 Jan 2023... that said the number of people that sit on a complaint for 2 years are rather small. 

Birdsnest451

PayPal Public Limited Company is an overseas company registered in Ireland  and trades in the UK as PayPal PLC UK Branch registered at Companies House FC037891.  Paypal PLC provides services to PayPal (Europe) and was set up to allow UK trading.

There is a significant negative impact on consumers if PayPal PLC UK is not registered with the FCA and withdraws as it means that the Irish company could cease trading leaving UK consumers with no redress. 

My complaint to FOS was in January 2021 and it has only just reached a decision, so there is little point in making a complaint against if the company has ceased trading by the time that a decision has been made.

DullGreyGuy

Birdsnest451 said:

PayPal Public Limited Company is an overseas company registered in Ireland  and trades in the UK as PayPal PLC UK Branch registered at Companies House FC037891.  Paypal PLC provides services to PayPal (Europe) and was set up to allow UK trading.

There is a significant negative impact on consumers if PayPal PLC UK is not registered with the FCA and withdraws as it means that the Irish company could cease trading leaving UK consumers with no redress. 

My complaint to FOS was in January 2021 and it has only just reached a decision, so there is little point in making a complaint against if the company has ceased trading by the time that a decision has been made.

Which services do you have being provided by PayPal Ireland? If I go to PayPal.co.uk it is PayPal Europe in Luxembourg and the news is about PayPal Europe as per https://www.financial-ombudsman.org.uk/news-events/complaints-paypal 

Birdsnest451

My interpretation of the Temporary Permission regulations is that they require a UK postal address for communication and a UK based company.  PayPal PLC based in Ireland and has a UK branch that provides services for PayPal (Europe) S.à r.l. et Cie, S.C.A.  They are the only UK registered companies listed on Companies House.

The FCA register doesn't show the UK based company and I have queried that with them as their listed AR is also based in Dublin.

Answers on a postcard when we have the UK address

Birdsnest451

This is FCA's response and I am lost for words.

Our rules

It's important to explain that The FCA is unable to interpret Legislation and so if you require further clarification, you may wish to seek independent legal guidance. Looking at the section of the Act you refer to which you can view here, it references 'Requirements to be met by notification' and section 2 states: The notification must— (c) specify a postal address in the United Kingdom to be used for correspondence.

There is no reference for a UK postal address to be stated on our register and we don't have any rules in our Handbook requiring this for firms in the Temporary Permissions Regime (TPR). Whilst in the TPR this firm is regulated in another European Economic Area (EEA) country, what we call it's home state. 

DullGreyGuy

What are you lost for words about? 

The FCA is a regulator not a law firm, giving legal advice to someone isnt a minor undertaking and exposes the giver to potential negligence claims. If you want legal advice you pay a lawyer and they will have the appropriate PI insurance to cover them should you subsequently claim their advice was erroneous. 

Birdsnest451

The FCA is a financial regulator with the responsibility to ensure that regulated businesses comply with the law.  The admission that they are unable to interpret the legislation that reflects the will of Parliament raises questions about their competence.

In this case the law requires that any business applying for Temporary Permission must have a postal address in the UK for communication.  FCA have failed to implement this in their rules on the basis that they are unable to understand the legislation.

Does this mean that in the twenty-first century ignorance of the law is now a valid defence?

Toufou

What it means is:  If you have a problem with Paypal eg they decide to hold your money like they have done with my husbands account, then you don't have any recourse but to comply with Paypal eg there is no longer a Governing Body in the UK that you can complain to as Paypal are now a law unto themselves.

My husband has held a Paypal account for 14 years as a private person NOT a Company.  He sells the odd thing like fishing reels, which he makes as a hobby (usually via word of mouth) thus Paypal is a good option for receipt of any payments. This seems to be ok for UK buyers, however on the odd occasion that he sells items to someone in the USA or other International Countries Paypal always puts his payments on hold stating an unusual amount of money, usually about £350 has gone into his account & they have placed it on hold until Paypal have received confirmation from the buyer that they have received the item and are happy with it, which with postal strikes can take over a month or more.  

Therein is the problem for my husband as not only is he out of pocket, Paypal are making a tidy profit on the interest they are making from holding the money but also hubby loses his money if the item is lost in the post or the buyer does not respond to Paypal emails.  

Even the Financial Conduct Authority have no Juristiction to help a single person & referred my husband to the FSO (apparently they did not know that the FSO no longer has Authority over Paypal from 1st December 2022), so they referred him to the FSO in Luxembourg!!!!!   The moral of the story is, either look for another payment option like Apple Pay or be prepared to have payments put on hold each time a payment is made into your account.   Looks like our Government has lost it's teeth once again to foreign companies (did it ever have any teeth is the first place?).

DullGreyGuy

Birdsnest451 said:

The FCA is a financial regulator with the responsibility to ensure that regulated businesses comply with the law.  The admission that they are unable to interpret the legislation that reflects the will of Parliament raises questions about their competence.

Some is "the law", a lot is the FCA's own rules and so indirectly the law by virtue of FSMA empowering the FCA/PRA to set such rules. 

They are not admitting that they are unable to interpret the legislation but are stating their role isnt to interpret the legislation for other parties. If you want to know if 2 hours is sufficient to meet the "in good time" requirement for ICOBS 4.3.-6 the FCA wont tell you that... you either go a complaint route and to the FOS or go to a lawyer and get advice from them. The later being the only one open to businesses. 

I accept they could have worded the text to be clearer but its a fairly obvious interpretation.