E-money agents and distributors: who handles complaints and safeguarding
In short: Where an app provider is an e-money agent or distributor of an e-money institution, the institution must handle the users’ complaints, and an eligible user can take them to the Financial Ombudsman Service. Where the app provider is a separate regulated firm, the app provider must handle them, and the Ombudsman can hear them only for activity carried on from a UK establishment.
An app provider that offers e-money accounts with an e-money institution needs to decide before launch whether to act as an e-money agent or distributor of the institution, or as a separate regulated firm that is the institution’s customer. Where the app provider is an agent or distributor, the user holds e-money the institution issued, so the institution must handle the user’s complaint and safeguard the user’s money, and the Financial Ombudsman Service (the Ombudsman) can hear an eligible user’s complaint against the institution. Where the app provider is a separate regulated firm, the app provider must handle the complaint and, unless the app provider is a small payment institution, safeguard the users’ money, and the Ombudsman can hear the complaint only if the activity is carried on from a UK establishment.
Key points
- An e-money institution may distribute or redeem e-money through an agent or a distributor, but may not issue e-money through either. Source: Electronic Money Regulations 2011, regulation 33
- The institution is responsible for anything its agents and distributors do or omit, as if it had expressly permitted it. Source: EMRs 2011, regulation 36(2)
- A user can take a complaint to the Financial Ombudsman Service only if the user has one of the relationships listed in DISP 2.7.6R with the firm complained about, which include being, or having been, its customer, payment service user or electronic money holder. Source: DISP 2.7.6R
- The Ombudsman can hear complaints about activities carried on from an establishment in the UK, including the activities of an e-money institution’s agents. Source: DISP 2.6.1R
- An institution must safeguard money received through an agent or distributor from the moment the agent or distributor receives it, and the duty stays with the institution. Source: FCA Approach Document (May 2026, version 8), paragraph 10.35
| Question | App provider is an agent or distributor | App provider is a separate regulated firm |
|---|---|---|
| Who provides the user’s e-money | The e-money institution, which alone may issue it (EMRs 2011 reg 33(2)) | The app provider provides the user’s account; the institution deals with the app provider |
| The user’s relationship with the institution | Holder of e-money the institution issued | Customer of the app provider; a relationship with the institution exists only if the institution provides a payment service to the user |
| Who must handle the user’s complaint | The institution, which is responsible for its agent or distributor (reg 36(2)) | The app provider |
| Financial Ombudsman Service route for an eligible user | Against the institution (reg 36(2); DISP 2.3.3G for agents; DISP 2.7.6R) | Against the app provider, if the activity is carried on from a UK establishment or the app provider falls within DISP 2.6.1R(1)(b) |
| Who must safeguard the user’s money | The institution, from receipt by the agent or distributor (Approach Document paragraph 10.35) | The app provider, for the users’ money, unless the app provider is a small payment institution; the institution, for funds it receives in exchange for e-money it issues to the app provider (reg 20(1)) |
Agent, distributor or customer
An e-money institution (EMI) may distribute or redeem e-money through an agent or a distributor, but it may not issue e-money through either, under regulation 33(2) of the Electronic Money Regulations 2011 (EMRs 2011); the institution is always the issuer. Under regulation 2(1), electronic money is monetary value represented by a claim on the issuer. A user who holds e-money distributed by an agent or distributor therefore holds a claim on the institution itself.
An agent provides payment services on the institution’s behalf, and the institution may provide payment services in the UK through an agent only if the agent is included on the Financial Conduct Authority’s register (regulation 34(1)). A distributor distributes or redeems e-money on the institution’s behalf but does not provide payment services. The FCA does not register distributors, although an applicant for authorisation must identify those it proposes to use (Payment Services and Electronic Money Approach Document, May 2026, version 8, paragraph 2.52). A business that simply loads or redeems e-money on behalf of an EMI is, in the FCA’s view, in principle a distributor (paragraph 5.5). Whether a business is an agent or a distributor depends on the definitions in regulation 2(1), whatever label, such as “partner” or “programme manager”, the contract uses.
Where the app provider is a separate regulated firm, the institution’s customer is the app provider, which is a regulated payment firm such as a payment institution or another EMI. The app provider offers accounts to users and holds money with the institution as part of the app provider’s business. The user contracts with the app provider, and the institution contracts with the app provider.
Who can take e-money complaints to the Financial Ombudsman Service
An eligible user can take e-money complaints to the Financial Ombudsman Service only against a firm with which the user has one of the relationships listed in DISP 2.7.6R of the FCA Handbook, such as being, or having been, its customer, payment service user or electronic money holder, or a potential one. The user must also be an eligible complainant under DISP 2.7.3R, a class that includes consumers, micro-enterprises, small businesses and some charities and trusts.
Where the app provider is an agent or distributor, the user holds e-money the institution issued and so is, in my view, the institution’s electronic money holder for the purposes of DISP 2.7.6R. A complaint about an e-money issuer includes a complaint about the business of any agent for which the institution has accepted responsibility (DISP 2.3.3G), and the Ombudsman can hear complaints about the activities of an EMI’s agents carried on from a UK establishment (DISP 2.6.1R). For a distributor the same result follows, because the institution is responsible for the distributor under regulation 36(2). The institution must handle the user’s complaint.
Where the app provider is a separate regulated firm, the user’s relationship is with the app provider, and the user must complain to the app provider. The Ombudsman can hear the complaint if the activity is carried on from an establishment in the UK, or if the app provider is in the temporary permissions or supervised run-off regimes providing services into the UK from an establishment in the European Economic Area (DISP 2.6.1R(1)(b)). Outside those cases the app provider is beyond the compulsory jurisdiction, and the user must look to any redress route available where the app provider is established. The user is also a payment service user of the institution only if the institution provides a payment service to the user, which depends on the contracts and the flow of funds. The institution’s sort code, IBAN range or name in payment confirmations does not show by itself that the institution does so.
Where the app provider is a separate regulated firm within the compulsory jurisdiction, and the institution receives a complaint and has reasonable grounds to be satisfied that the app provider may be solely or jointly responsible, the institution may forward the complaint to the app provider (DISP 1.7.1R). The institution must then forward the complaint promptly and in writing, tell the user promptly in a final response why it has done so and how to contact the app provider, and handle any part of the complaint for which the institution remains jointly responsible.
In Quidpay Finance Ltd v SettleGo Solutions Ltd (t/a OpenPayd) [2026] EWHC 1991 (Ch), an EMI provided e-money accounts in the name of a payment firm, which allocated a virtual IBAN to each of its own end customers. The judge described those accounts as “running ledgers of e-money standing to the credit of QuidPay”, and set out an alleged payment chain in which each firm issued e-money to the next ([5], [8]). In The Kingdom Bank Corporation v Moorwand Ltd [2023] EWHC 3069 (Comm), the parties disputed whether an intermediary had acted as the EMI’s agent or as its customer, and the court did not need to decide the point ([26], [40]). Neither judgment decides who must handle an end user’s complaint.
The institution’s responsibility for agents and distributors
An EMI is responsible, to the same extent as if it had expressly permitted it, for anything done or omitted by a distributor, an agent or any other entity issuing, distributing or redeeming e-money or providing payment services on its behalf, under regulation 36(2) of the EMRs 2011 (see also Approach Document, paragraph 5.6). An EMI that relies on a third party for operational functions must also take all reasonable steps to ensure that the EMRs 2011 and the Payment Services Regulations 2017 are complied with (regulation 36(1)).
An EMI that appoints agents or distributors therefore cannot decline to handle a user’s complaint by pointing to the agent or distributor. The institution and the agent or distributor may allocate cost and conduct between them in the programme agreement, and the institution may secure there the oversight rights it needs to meet regulation 36(1). The two firms cannot contract out of the institution’s responsibility under regulation 36(2).
Who must safeguard the money
An EMI must safeguard funds received in exchange for e-money it has issued, under regulation 20(1) of the EMRs 2011. Where an agent or distributor receives the funds, the institution must safeguard them as soon as the agent or distributor receives them, and the duty remains with the institution (Approach Document, paragraph 10.35). The institution must also ensure that an agent or distributor holding relevant funds on its behalf segregates them (paragraph 10.41). The CASS 15 rules supplement these requirements from 7 May 2026 (see the consolidated safeguarding regime).
Where the app provider is a separate regulated firm, the institution safeguards the funds it receives from the app provider in exchange for e-money it issues to the app provider. The app provider must safeguard the users’ money if the app provider is an authorised payment institution (Payment Services Regulations 2017, regulation 23) or an e-money institution (EMRs 2011, regulation 20); a small payment institution may do so voluntarily. An app provider that is itself a UK EMI and uses the segregation method must place relevant funds still held at the end of the next business day in a separate account with an authorised credit institution or the Bank of England, or invest them in approved assets held by an authorised custodian (regulation 21(2)).
Complaint handling and what users must be told
All payment service providers and e-money issuers are subject to the complaints rules in DISP, even if they do not need FCA authorisation or registration (Approach Document, paragraph 11.5). In good time before a user is bound by a framework contract, the provider must tell the user about its own complaints procedure, whether the Financial Ombudsman Service is available and, where the Ombudsman is not available, any other dispute resolution provider the provider uses or that the provider uses none (paragraphs 11.9 to 11.11). A payment service provider must reply to a complaint from a payment service user who is not an eligible complainant within 15 business days or, where reasons beyond the provider’s control prevent a full reply and a holding reply is sent, within 35 business days (regulation 101 of the Payment Services Regulations 2017).
An eligible user may take a complaint about rights and obligations under Parts 6 and 7 of the Payment Services Regulations 2017 or Part 5 of the EMRs 2011 (Approach Document, paragraph 11.16) to the Ombudsman once 15 business days have passed without a holding response, or 35 business days where one was sent (DISP 2.8.1R(2A)). The user must refer the complaint within six months of the final response (DISP 2.8.2R). The six-month period starts only from a final response that tells the user about it (DISP 2.8.3G), so a refusal that does not mention the limit does not start it. Separate rules govern closing a payment account.
Viewpoint
The user sees the institution’s name on account details and payment confirmations, while the two firms record the structure of the programme in the programme agreement. Where the app provider is the institution’s agent or distributor, the institution must handle the complaint, because the user holds e-money the institution issued, and a reply that the user is “not our customer” does not meet that duty. Where the app provider is a separate regulated firm, the app provider must handle the complaint, and an institution that receives the complaint may forward the complaint under DISP 1.7.1R, provided the institution does so promptly and tells the user in a final response why and how to reach the app provider.
The app provider and the institution must each tell users about their complaints procedure and whether the Ombudsman is available (Approach Document, chapter 11).
Frequently asked questions
Can a user complain to the Financial Ombudsman Service about an e-money account opened through an app?
Yes, if the user is an eligible complainant and has one of the relationships listed in DISP 2.7.6R with the firm complained about, such as being, or having been, its customer, payment service user or electronic money holder. Where the app provider is the e-money institution’s agent or distributor, the user holds the institution’s e-money and can complain about the institution. Where the app provider is a separate regulated firm, the user must complain to the app provider, and the Ombudsman can hear the complaint only if the app provider falls within DISP 2.6.1R, usually because the activity is carried on from a UK establishment.
Is an e-money institution responsible for its distributor?
Yes. Under regulation 36(2) of the Electronic Money Regulations 2011, an e-money institution is responsible for anything done or omitted by a distributor or agent acting on its behalf, to the same extent as if it had expressly permitted it (see also FCA Approach Document, paragraph 5.6).
What is the difference between an e-money agent and a distributor?
An e-money agent provides payment services on the institution’s behalf, and the institution may provide payment services in the UK through an agent only if the agent is included on the FCA’s register (EMRs 2011, regulation 34(1)). A distributor distributes or redeems e-money on the institution’s behalf but does not provide payment services, and the FCA does not register distributors (Approach Document, paragraph 2.52). Neither may issue e-money (regulation 33(2)).
What time limits apply to e-money complaints?
For complaints about rights and obligations under Part 5 of the Electronic Money Regulations 2011 or Parts 6 and 7 of the Payment Services Regulations 2017, an eligible user may refer the complaint to the Financial Ombudsman Service after 15 business days, or 35 business days where a holding response has been sent (DISP 2.8.1R(2A)). The user must refer it within six months of a final response that tells the user about that limit (DISP 2.8.2R and 2.8.3G).
Who must safeguard money received by an e-money agent or distributor?
The e-money institution must safeguard the funds as soon as the agent or distributor receives them, and the duty stays with the institution (regulation 20 of the Electronic Money Regulations 2011; FCA Approach Document, paragraph 10.35).
For advice on structuring an e-money programme, appointing agents or distributors, or the complaints and safeguarding arrangements behind a payments product, contact Rob Bratby at Bratby Law. Further detail on the e-money regime is on the e-money regulation page.
