City regulator sounds alarm over Revolut advert

Controversial payment app Revolut has been labeled “a wolf in sheep’s clothing” as concerns about its finances hover over pursuing a banking license.

The company said this month it expected to be licensed in the UK ‘soon’ but has faced setbacks.

And in yet another blow, the Financial Conduct Authority (FCA) ordered it to take steps to “amend or withdraw” an ad within 48 hours, review all financial promotions and report on “why not- compliant promotions are in circulation’.

The watchdog declined to provide details about the Revolut ad or why it was seen to violate the rules that state, “All financial services advertisements and promotions must be fair, clear and not misleading.”

Financial companies can become victims of this, for example by not making risks clear or by giving unrealistic expectations.

Earlier examples include an ad from life insurance company DeadHappy, which used a photo of serial killer Harold Shipman.

It came as an All-Party Parliamentary Group (APPG) warned that licensing Revolut would pose a risk to the UK banking sector.

“I would be amazed if Revolut is welcomed with open arms and a blind eye to the licensed banking industry,” said Heather Buchanan, executive policy director for the APPG on Fair Business Banking. Revolut is plagued by setbacks.

The most notable was when it released its 2021 accounts on March 1, five months late. While hailing its first profit, accountant BDO said £477m in revenue – three-quarters of its £636m turnover – could not be verified and may have been misstated.

Revolut hired lawyers to press BDO’s opinion ‘affirmed that “the financial statements give a true and fair view”’ of the company’s business.

It alleged that the media had ‘misreported’ the accountant’s opinion and that his earnings were ‘not in question’ and ‘independently verified’.

But that may have backfired, with some board members deeming the statement an “overreaction,” the Financial Times reported.

It has sought to pave the way for a license by appointing City greats to its board, including Martin Gilbert, the former head of wealth management company Standard Life Aberdeen, who is chairman.

Revolut has also faced allegations of a toxic work culture. It was revealed in January that the company was assembling a team to track whether staff were “approachable” and “respectful,” but denied that this was done to appease regulators.

Despite insisting that the numbers are correct, the concerns don’t seem to be going away as scrutiny of the financial system intensifies following the failures of several US banks and Credit Suisse.

“Revolut needs to show it can be trusted before it takes on this responsibility,” Buchanan said.

Revolut said: “We take our regulatory responsibilities incredibly seriously and work closely with all our regulators to ensure we deliver the best outcome for our customers.

“In anticipation of the Consumer Duty that takes effect in July, we are reviewing all communications on our website to ensure that customers receive the best possible experience when using our products.”