August 8, 2022

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Customers of fast-expanding digital banks Revolut and N26 are not protected by the financial ombudsman...

Customers of fast-expanding digital banks Revolut and N26 are not protected by the financial ombudsman because neither company is licensed in Ireland.
his means customers will not be able to use the financial ombudsman service if they have a dispute with the companies.

Instead, they are being referred to Lithuania or Germany if they have a complaint.
This has prompted one consumer advocate to question whether people in Ireland should use the fintechs for their banking needs.
The Financial Services and Pensions Ombudsman (FSPO) confirmed its remit does not extend to N26 or Revolut.
This is because the customer contracts they issue are not subject to Irish law.
A spokesperson for the ombudsman said: “Any investigation undertaken by the FSPO pursuant to the Financial Services and Pensions Ombudsman Act 2017 must be pursuant to the laws of Ireland.
“If a customer has a contract with a financial service provider that is subject to the laws of a different jurisdiction, it is not possible for an FSPO investigation to proceed unless both parties agree to that investigation proceeding pursuant to the laws of Ireland.”
Revolut and N26 now have nearly two million customers between them here.
The planned closure of Ulster and KBC banks means the two operations are snapping up thousands of customers every day.
Around 1.5 million people are seeking new banking arrangements.
The decisions of the ombudsman are legally binding for financial firms that come under its ambit and can be challenged in the Irish courts.
N26 has a German banking licence and its customer contracts are subject to the laws of that country.
Revolut has been granted a banking licence by the Lithuanian authorities, with its customer contracts governed by the law there.
It confirmed that “the laws of the Republic of Lithuania apply to the terms and conditions” of customer contracts issued here.
“If customers have any complaint, they can refer it to Bank of Lithuania,” Revolut said.
However, it insisted its customers could still rely on the mandatory consumer protection rules of the European country where the customers live.
Customers in dispute with it can also file a complaint to the out-of-court dispute resolution authorities that handle consumer complaints in their country.
It provided a list of mediation services that includes the FSPO.
N26 was asked whether Irish or German law governs the contracts that are issued to Irish customers.
The FSPO has no role if the customer contracts are not based on Irish law.
A spokesperson for N26 said: “Contracts are under German law and formal complaints have to go to BaFin – the German banking regulator.”
It added that N26 is governed by German banking regulations and licensed by BaFin.
N26 said its customer service was easily accessible to all customers, 365 days a year, and in a wide range of different channels including in-app chat, phone, email and social media.
“If a customer is still not happy with the response from our customer service team, they can submit an official complaint to us via email or a letter to our head office,” it said.
Brendan Burgess, the founder of, said Revolut’s customer service was poor and questioned whether people should use the digital bank to have their salary paid in.
“It’s not a good idea to have large amounts of cash in Revolut because if there is a problem they are difficult to deal with,” Mr Burgess said.
“You can’t get to speak to a human if there is a problem.”
He said he currently had a Revolut account and found it “fantastic” for making payments.
But he added: “I wouldn’t use them as a proper banking account because it’s too difficult to sort out problems.”

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