The Department for the Economy has defended hiring a firm for the High Street Voucher Scheme that was recently fined for its part in a ''prepaid card cartel'. Prepaid Financial Services has been given the contract to deliver the GBP145million scheme that will be available to everyone over the age of 18 in Northern Ireland. Over the past few months, the company has been involved in a series of issues which include their handling of a prepaid card scheme for asylum seekers in the UK, an investigation by the Central Bank of Ireland and being one of five companies who provisionally agreed to pay fines in the UK for their involvement in an alleged 'prepaid card cartel'.
In March of this year, PFS, along with Allpay and Mastercard, agreed to pay fines totalling more that GBP32million for their alleged anti-competitive behaviour. The case relates to prepaid cards that are used by local authorities to distribute welfare payments to vulnerable members of society, such as the homeless, victims of domestic violence and asylum seekers. PFS was fined GBP1 million for its part in the scheme.
At the time, Chris Hemsley, Managing Director of the Payment Systems Regulator, said: "Pre-paid card services, like these, can provide significant benefits to local authorities as one way to make welfare payments to some of the most vulnerable people in society. "By colluding in this way, we consider the parties were acting as a cartel. Because of the reduced competition local authorities may have been missing out on an alternative supplier or products that were either cheaper or better suited to both their needs and the needs of those using the pre-paid cards.
"Collusion in payments is absolutely unacceptable. Where we see it happening, we will take action, stop it, and seek to impose significant penalties." Two months later in May, the Irish branch of PFS, which runs it's European business, came under investigation from the Central Bank of Ireland regarding significant regulatory concerns.
The Irish Times has reported that these are related to anti-money-laundering and counter-terrorism financing matters, risk, control frameworks and governance at PFS Card Services (Ireland). It is understood that PFS' parent company, EML Payments, suffered a 46% loss in share value after the regulatory probe was announced by the CBI, however it has since recovered some of this value. PFS used to carry out most of its European work through its UK branch based in London, but this moved to its Irish branch following Brexit.
EML has said that the CBI investigation "may see an impact of delayed programme launches". A Central Bank of Ireland spokesperson told Belfast Live: "Our regulatory engagement with the firm continues and we will not be commenting further at this time." The Guardian has reported how thousands of Asylum Seekers in the UK "went hungry" after they suffered problems with the prepaid cards they had been given.
It said that around of third of those given the cards had struggled to use them properly. PFS had taken over the running of the prepard card scheme contract from the Home Office in May 2021, from previous provider Sodexo. Following the concerns a PFS spokesperson told the Guardian: "PFS has been working closely with the Home Office to prepare for the switch over.
As part of that preparation, PFS has created and issued cards according to the data we received from the Home Office. The majority of service users have successfully activated and are using their cards." The Department for the Economy has said that it was aware of these issues with PFS prior to the awarding of its contract for the High Street Voucher scheme, and does not believe they will effect its rollout.
A Department for the Economy spokesperson said: "The Department for the Economy is aware of the issues and does not believe these will have any impact on the rollout of the High Street Scheme. The Department's contract for the supply of a prepaid card is with PFS (UK) which has no involvement in the Central Bank of Ireland investigation. PFS(UK ) is regulated separately by the Financial Conduct Authority in the United Kingdom.
"The contract for the pre-paid cards was awarded after a secondary competition using a government wide contracting framework in which four pre-qualified companies on the framework were invited to submit bids. Two companies submitted completed tender documentation. This process was carried out in accordance with the relevant procurement procedures and best practice."
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