Your funds are protected through 'safeguarding' and not through the Financial Services Compensation Scheme (FSCS).
What does this mean?
Most banks will take your account funds as a deposit to use for their own purposes or lend to other customers. Bank accounts are covered by the FSCS protection.
With Telleroo you have an e-money account, not a bank account. E-money accounts are not covered by the FSCS protection.
What is safeguarding?
Your funds are held in the segregated account with Clearbank. This account is safeguarded, meaning it's segregated from any other operational funds and no third party can access it.
This process includes:
Segregated accounts: Your funds are segregated from Telleroo and our banking partner’s own funds. When you join Telleroo, a Virtual IBAN is created for your funds.
Independent checks: Every year, our banking partner is checked to ensure that they are meeting safeguarding obligations by an independent auditor.
Obligation reports: The independent auditor produces an annual report confirming that our banking partner is meeting safeguarding obligations. These reports are available to the FCA on request.
How is my e-money account protected?
Your money is kept safe in a segregated account. For EMI customers (your sort code is 04-20-00) this means we keep it separate from Telleroo's funds, and for EMD customers (your sort code is 04-04-73), this means we keep it separate from Telleroo's and our principal Moorwand’s funds.
Your money is also safeguarded, which means the bank assures that, even in the unlikely event that Telleroo or Moorwand were to go out of business, your money would still be protected and available.
The funds will continue to be held by the bank and be accessible to you. Your funds will not be available to third parties such as liquidators.
If both Telleroo and Moorwand go out of business, an insolvency practitioner would be appointed to return the safeguarded funds to you. You would get most of your funds back, except deducted costs from the insolvency practitioner for the distribution of funds to Telleroo customers. Due to the insolvency process, it could take longer for funds to be returned to you than if the account was held by a bank.
More information about using a non-bank payment service provider and the protections offered can be found on the FCA’s website at https://www.fca.org.uk/consumers/using-payment-service-providers