City regulator sounds alarm on revert ad
City regulator sounds alarm over Revolut ad as payments app is called ‘a wolf in sheep’s clothing’
Controversial payments app Revolut has been dubbed a ‘wolf in sheep’s clothing’ as concerns hang over its banking license pursuit of its finances.
The company said this month it hoped to get a UK license ‘imminently’, but has hit a snag.
And in a new blow the Financial Conduct Authority (FCA) has ordered steps to ‘modify or withdraw’ an advert within 48 hours, review all financial promotions and ‘why non-compliant promotions are in vogue’ Ordered to report back.
Setbacks: Revolut co-founder Vlad Yatsenko, CEO Nikolay Storonsky and CFO Mikko Salovara
The watchdog declined to give details of the reverse advertising or why it observed it violated its rules: ‘All advertising and promotion for financial services must be fair, clear and not misleading.’
Financial firms can be dishonest with them, for example, by not explaining the risks or giving unrealistic expectations.
Past examples include an advertisement for life insurer Dead Happy, which used a picture of serial killer Harold Shipman.
This came as an all-party parliamentary group (APPG) warned granting a license to Revolut would present risks to the UK’s banking sector.
‘If Revolt is greeted with open arms and blindfolded eyes in the licensed banking sector, I will be completely amazed. We could be giving a wolf in sheep’s clothing, and I don’t think it’s going to be good for the sheep at all,” said Heather Buchanan, APPG’s executive policy director on Fair Business Banking. The reversal is beset by setbacks.
The most prominent was when it published the accounts for 2021 five months overdue on 1 March. While it praised its first profit, auditors BDO said the £477 million in revenue – three-quarters of its £636 million turnover – could not be verified and could be misreported.
Revolut hired lawyers to corroborate BDO’s opinion, affirming that “the financial statements give a true and fair view of the company’s affairs”.
It claimed that the media was ‘misrepresenting’ the auditor’s opinion and that its revenue was ‘not in question’ and had been ‘independently verified’.
But it may have backfired, with some board members seeing the statement as an ‘overreaction’, reports the Financial Times.
It has tried to smooth its path towards a license by appointing City grandees to its board, including Martin Gilbert, the former head of asset manager Standard Life Aberdeen, who is chairman.
Revolut has also faced allegations of a toxic work culture. In January, it was revealed the firm was setting up a team to ascertain whether staff were ‘contactable’ and ‘respectable’, but denied this was done to appease regulators.
Despite insisting its numbers are accurate, concerns show no sign of abating as scrutiny of the financial system increases following the failure of several US banks and Credit Suisse.
Buchanan said, ‘Revolution must show it can be trusted before it can be given this responsibility.’
Revolut said: ‘We take our regulatory responsibilities incredibly seriously and work closely with all of our regulators to ensure that we deliver the best possible outcomes for our customers.
‘Ahead of the consumer charges coming into force in July, we are reviewing all communications on our website to ensure that customers have the best possible experience when using our products.’
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