British holders of some pre-payment cards could find they no longer work after a regulator froze the UK assets and activities of a scandal-hit e-money firm.
Customers affected are being advised to contact Wirecard or their card provider directly, while those who receive their benefits through the system are being referred to the Department of Work and Pensions (DWP) for support.
The Financial Conduct Authority (FCA) moved to impose restrictions against Wirecard after the collapse of its German parent company, which is now the focus of a major fraud investigation.
The UK watchdog said the move was taken to “protect the interests and money of consumers who use Wirecard”.
There is no indication of how many people may be affected.
Wirecard’s failure owing creditors almost £3.2bn, is shaping up to be one of Germany’s biggest corporate scandals.
The country’s own regulator BaFin has faced criticism at home and abroad for not spotting problems sooner and is facing an EU inquiry into whether its response to allegations of impropriety at Wirecard, which stretch back years, was adequate.
It came as the Philippines justice minister said Wirecard’s former operations chief, under suspicion in Germany over the accounting scandal, had been in the country this week, but had since left for China.
Wirecard became the first member of Germany’s DAX index to go bust after revealing a £1.7bn hole in its books.
The firm’s long-time auditor EY said the missing money was the result of a sophisticated global fraud.
Under the order issued by the FCA, Wirecard must not dispose of any assets or funds, and not carry out any regulated activities.
It must also say on its website that it is no longer permitted to conduct any regulated activity.
Explaining its actions, the watchdog said in a statement: “There are ongoing events in Germany concerning companies closely linked to Wirecard.
“Wirecard’s parent company, Wirecard AG based in Germany is currently the subject of law enforcement interest and insolvency proceedings.”
It added: “Our primary objective is to protect the interests and money of consumers who use Wirecard.”
In light of the money missing from the German firm, the FCA said it “immediately placed requirements on the firm’s UK business so that it should not pay out or reduce any money it holds for its customers except on their instructions”.
It went on: “We have been working closely with Wirecard UK and other authorities over the past few days to take action that protects consumers.
“We are continuing to do this and on 26 June, we took additional measures to require the firm to cease all regulated activities in order to further protect customer money. This now means customers money cannot be accessed.”
The FCA says customers who use Wirecard services should contact the firm on its website or their card provider.
Those whose account has been frozen where they receive benefit payments are advised to contact the DWP.
Gareth Shaw, head of money at the consumer group Which?, said: “This will be deeply concerning for people who have been thrown into limbo and left unable to access their money, particularly as it is currently unclear when they will be able to do so again.
“While the FCA has moved to protect people’s finances, this decision could have a severe short-term impact on those who have limited or no other options available as an alternative.
“Affected firms should be urgently contacting customers proactively to provide clarity about what additional help they can offer those unable to access their funds, and give a timeframe for how long any disruption is expected to last.”