First Supervisory Notice to Lilium Markets Ltd

Dec 7, 2022 11:12:05 AM

What has happened?

In November 2022, the FCA issued a First Supervisory Notice explaining its decision, taken the previous month, to vary the Payment Services Regulations registration granted to Lilium Markets Ltd by removing from it the payment service the firm provided (money remittance) and imposing certain requirements on the firm with immediate effect.

What are the key points of the Notice?

The FCA concluded that it was necessary to vary the firm’s registration by removing the payment services it provided and by imposing the requirements because it appeared that the firm no longer met, or was unlikely to meet, the conditions for registration under regulation 14(11) of the Payment Services Regulations and it was desirable in order to protect the interests of consumers pursuant to regulation 12(1)(d) of the Payment Services Regulations.

The FCA identified serious concerns that:

A small payment institution (“SPI”) is required, as a condition of registration under regulation 14(11) of the Payment Services Regulations, to be included in the HMRC Register. The firm is in breach of this requirement as it is not included on the HMRC Register, it has never successfully obtained HMRC registration, and its two applications for HMRC registration were rejected on 21 April 2020 and 15 January 2021 respectively.
The firm was registered as a payment services firm to provide money remittance only; it is not authorised under FSMA 2000 and does not hold any permissions to conduct regulated activities under that Act. The FCA considers that the contents of the firm’s website (not live as at September 2022), various YouTube videos purporting to be from the firm (which remain live), two online articles (which remain live), and the firm’s business plan suggest that the firm may be offering, or intending to offer, contract for differences and other investment services while not having the relevant permissions to do so.

The FCA considered that variation of the firm’s registration by removing its payment service and imposing the requirements should take immediate effect because the matters set out in the Notice raised serious concerns about the firm’s suitability and demonstrated that the firm was putting customers at risk of significant potential loss or adverse effects and otherwise.

By the close of business on Monday 10 October 2022, the firm had to remove, or where this was not practicable, use its best endeavours to secure the removal of, any live advertising and financial promotions.

The firm could not issue or publish any advertising or financial promotions in relation to payment services, money service business, regulated activities, or electronic money. This included, but was not limited to, advertising or publication on the website, YouTube, and social media channels.

The firm had to secure and preserve all records and/or information (physical or electronic) relating to all activities carried on by it, including but not limited to regulated activities. These had to be retained in a form and at a location within the UK to be notified to the FCA in writing by close of business Monday, 10 October 2022, such that they (or, so as not to hinder the firm’s performance of its business activities, true copies of them) could be provided to the FCA, or to a person named by the FCA, promptly on its request.

By the close of business Friday, 7 October 2022, the firm had to update its details displayed on the FCA Register using Connect.

The firm had to provide written confirmation to the FCA that it was in compliance with these requirements by the close of business on Monday, 10 October 2022, together with a list of all advertising and financial promotions removed.

The effect of the removal of the payment service was that the firm can no longer provide any payment services.

How can we help you?

If you’d like to know more about how we can help you with your payment services regulations, financial promotions or HMRC registration, or any other regulatory compliance issues, our specialist team is here to help.

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