New terms and conditions: Financial Services Compensation Scheme

Hi all,

I am trying to understand the last part of point 8 of the new terms and conditions (see below). What does not being covered by the Financial Services Compensation Scheme imply? Also, why are we not?

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Very good question actually! Not many people know what this means and I think every firm on the planet does a bad job of explaining it. I’ll provide an answer though since I have an understanding :slight_smile:

The Financial Services Compensation Scheme (FSCS) is a British Government backed reimbursement scheme in event of bank failure; basically if Revolut were to go under, you’d have a guarantee that the British Government would finance your funds within the account (up to 85.000£ or 170.000£ for joint accounts; temporary high balances are covered in certain circumstances e.g. sold a house recently)

It only really exists though because banks can go under due to lending and economic conditions, it’s to help prevent a loss of confidence resulting in “pull all my money out of the bank because if it goes bust I’m losing everything” that can actually further spiral the trust of the financial system.

It’s a bit different for firms like Revolut, e-money institutions can’t lend any of their ledger out, so there isn’t a risk of collapse. (It’s also why they don’t pay interest on in-credit balances. They can’t do any lending so they can’t make the revenue to pay out interest.) On top of that Revolut has to store funds with a firm that is FSCS protected (Revolut UK uses Lloyd’s & Barclays). In the event Revolut goes bust, you would reclaim your money from them coordinated by administrators/liquidators of Revolut and whoever manages Revolut’s relationship with either bank. This may be less [but not massively] as Revolut has to pay for someone to manage the liquidation of assets.

You would receive payments first, before creditors.

Another question you may have is: what happens if the underlying bank goes under? To my knowledge (although I’ll admit I’m not 100% sure on this one) is that as the accounts are held in your name and not Revolut’s, you would receive up to 85.000£ or 170.000£ depending on the account type, reimbursed backed by the UK Govt. Note that this would be shared with any other balance you hold at either bank though!

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I don’t think this is a 100 % correct description. The accounts are business accounts in Revolut‘s name, they are ring fenced (the money held in them isn’t part of their capital), and the money is held there in your name. Similar to how a solicitor might have money in your name in one of his accounts for certain purposes. But the compensation scheme does not cover it, only personal consumer accounts are covered. And the accounts in question aren’t personal consumer accounts.

BBVA published a paper about security / compensation for e-money licensed institutions a while ago.

I never understood how Revolut stores the money. Because it is quintessential in any compensation scheme as the insurance is per account, not per user.

I know we have unique IBANs, but are they in a unique account or a pooled account with multiple IBANs connected?

If 1M Revolut users share one pooled ring-fenced account of say £1B (on average £1,000 per Revolut user), and the compensation scheme only covers up to £100,000 per account (that is, 0.01% of the total amount of 1 bn.); then the 1M Revolut users must each share the collective compensation (0.01% of £1,000).

Which means each Revolut user would be insured for only 10 pence, i.e. there might as well be no protection scheme in place.

I don’t know about the personal accounts, but commodities (gold) and cryptocurrencies are in pooled accounts, and thus would be very minisculely protected.

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Do I understand it correctly that we have 30 days time to accept these new terms. But if we don’t accept them “migration” will happen anyway ? So there is no choice really.

Since revolut app is not in eng for me, sometimes its hard to understand that they meant in translation.

Revolut - once more time - present option for android users to choose language freely regardless of system language !!! Its super annoying.

Also good practise would be to present current terms, so I can compare whats really changed…

Okay so I read it and it says basically money is protected by holding trustee accounts at banks; the assets must be held in a way that creditors couldn’t claim on the assets. They don’t have to have the liquid capital if they have insurance that would cover it in the event of bankruptcy.

Leaves one to wonder what would happen if the bank with the pooled accounts collapses, but I don’t think that Lloyd’s /Barclays has any chance of becoming bankrupt, in all honesty. The government would prop them up like last time, should it be required. As they make up a solid 25+% of customer accounts in the UK and a lot of business accounts too, it would be cheaper to keep them alive than to let them fail.

No, national schemes by the EU are 100.000€ per customer at a financial institution. If you have 10 accounts at the same bank you don’t get 1m euro protection at the same bank.

If you don’t accept them you close the account, it’s rather simple.

Can anyone tell whats changed in these new terms? No way to know I guess if you can not stored previous terms which are now replaced with new ones?

Might want to ask them in-chat?

True. And the customer in this case would be Revolut and not individual users?

banks aren’t allowed to use trustee accounts nor e-money accounts as capital to continue running iirc, so the money should never be deducted from if the bank fails (besides of fees associated with getting the money back to people)

Hi, I just would like to know the changes between old and new version of T&C. Is there any post explaining this?

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Hi, I would love to know why my account is under review for more than 3 weeks. This is turning into a joke. Can a moderator please let me know why I can’t access my funds?

Anyone any idea how the new terms and conditions are different from the previous version? Does anyone have a diff? I couldn’t find back the previous version, so difficult to guess.

Also, it’s worth noting that isn’t new to the terms and conditions.

Google it and compare the old terms with the new terms. If you have a PDF of the old terms, you may be able to use Acrobat or a website to compare.

I found these:

Interesting stuff:

  • Terms regarding Turbo-transfers were removed.
  • Terms regarding reversing refunds removed, i.e. they are now “unconditional”. Might be a legal slipup in the old terms.
  • UK Direct Debits were not covered by old terms. Your rights with UK DD’s are now in the terms as well.

Stuff still missing:

  • Google Pay and Apple Pay not mentioned in the terms?
  • Revolut Junior not covered by the terms?
  • Vaults, Stocks, Perks, etc. not mentioned either. Perhaps covered elsewhere.

Uninteresting stuff:
Rewordings, punctuation, accents and apostrophes, missing words, misspellings.

One silly slip-up with regards to how and when you can access payment information. The old terms says you can only access this info up to 6 years after you end your Revolut account. The new terms add that you may also access this info while you are a customer :joy:. Silly really.

A new email address for formal complaints.

Clarification of what ‘open banking’ means and how it’s done. Old terms were vague about this. Revocation of consent, your rights, AML, etc. about Open Banking which were entirely missing before.

Clarification of the terms when you access Revolut account details and spending history through Open Banking or API in an app other than Revolut’s.

It also does add that Revolut will analyze your spending from connected open banking accounts (in order to show you the spending graph in the Revolut App). Nothing to worry about there.

Google Maps terms also apply.

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Since you didn’t provide the document you compared it to, I’m even more confused. I suppose you used a much older pdf. It would have been much better if the revolut had reviewed the latest changes, or at least gave the place where the previous terms are stored with the release date. It seems, that the new fee structure is linked. Below example:

Cryptocurrencies

Regular customers
Before 20th May 2020 - 1.5%
After 20th May 2020 - 2.5%

High-frequency standard customers
Before 20th May 2020 - 2%
After 20th May 2020 - 3%