The FSCS does not cover electronic money products, but under the safeguarding requirement, customer funds are fully protected
The Financial Services Compensation Scheme does not cover electronic money products. No other compensation scheme exists to cover losses from your electronic money account. Funds are safeguarded by our FCA-regulated e-money partners at a credit institution.
Your money is safe as funds are safeguarded by our FCA-regulated e-money partners at a credit institution. These funds are bankruptcy remote from both Nook and its financial services providers, Embedded Finance Ltd and The Currency Cloud Ltd.
The main difference between safeguarding and FSCS is the customers' protection level. Under the safeguarding requirement, customer funds are fully protected, and in the case of insolvency, they will be entitled to get all of their sums returned. While under FSCS, the maximum protection is only up to £85,000.
When funds are posted to your account, e-money is issued in exchange for these funds, by an Electronic Money Institution who we work with, called Currencycloud. In line with regulatory requirements, Currencycloud safeguards your funds. This means that the money behind the balance you see in your account is held at a reputable bank, and most importantly, is protected for you in the event of Currencycloud’s, or our, insolvency. Currencycloud stops safeguarding your funds when the money has been paid out of your account to your beneficiary’s account.