Newcastle Building Society has formally urged Norway's financial regulator to investigate Towah, a payment processor. The British bank alleges Towah mishandled affiliate funds, failing to segregate client money as required by UK law since 2011. This push for regulatory action follows years of issues, including thousands of dollars in missing deposits.
In 2011, Newcastle Building Society instructed Towah to place affiliate funds into separate accounts. This was a direct requirement of UK law. Towah ignored the directive. By June of the following year, thousands of dollars in deposited money had disappeared, and the company still had not established the mandated accounts.
Problems with Towah's fund management extended further. Beginning in mid-2012, affiliates of Bidify could not access their cash held by Towah. The payment processor claimed a full investigation would take 540 days. Towah offered no explanation for what it was investigating during this extended lockdown period.
Two major incidents precipitated this freeze. Bidify first altered its compensation structure, which led members to contact their banks alleging fraud. The company then faced a large-scale credit card fraud scheme involving stolen cards. Both events alarmed Bidify's banking partners, prompting them to freeze all associated accounts.
Bidify continued to record commissions on paper even as banks held the actual funds. Affiliates who had invested significant sums found themselves unable to retrieve any money. Bidify's response was to blame Towah and continue its recruitment efforts. The money remained frozen for a year and a half, even after Bidify rebranded as MyCenterBid.
Newcastle Building Society's own experience with Towah echoed these issues. When Towah began providing prepaid debit card services for the bank's customers in 2011, problems arose almost immediately. Affiliate deposits made through the e-wallet never reached the bank. Towah attributed this to funds being sent to the wrong account, suggesting either incompetence or deliberate misdirection.
The bank's internal communications became increasingly stern. On June 7, 2011, NBS clearly stated the legal obligation for affiliate deposits: they must reside in segregated accounts, not commingled. Towah had still not complied by June 17, and the missing money had not appeared.
Newcastle Building Society's formal complaints to Norwegian authorities underscore the gravity of Towah's operational failures. The bank's demand for a Norway Financial Supervisory Authority investigation indicates that experienced financial institutions now believe Towah's practices warrant direct regulatory intervention.