UK ministers ask to meet Revolut

Senior government ministers have requested a meeting with the leadership of Revolut, the UK’s most valuable fintech company, amid concerns that the company’s banking licence application could be rejected by City regulators. While the official purpose of the meeting is to discuss the government’s growth agenda, it comes in the wake of complaints from Revolut and other businesses regarding regulatory obstacles that they believe could push firms to relocate abroad.

Reports have emerged indicating that regulators within the Bank of England are likely to reject Revolut’s application for a UK banking licence due to concerns raised by the company’s auditor, BDO, regarding its balance sheet. BDO stated in Revolut’s delayed 2021 annual report that it was unable to obtain a comprehensive view of the company’s revenue, potentially leading to material misstatements in its financial balances.

The meeting, which is expected to involve Treasury and business ministers, will occur in the coming weeks and is anticipated to include Revolut’s CEO, Nik Storonsky, and its chair, Martin Gilbert. Revolut has been waiting for over two years for approval of its banking licence application, which would enable the firm to hold customer deposits and provide its own-branded loans, including mortgages. This would create a new revenue stream and potentially pave the way for banking licences in other countries.

However, UK regulators have raised concerns about Revolut’s reputation, citing issues such as late account filings, regulatory breaches in the EU, and corporate culture. If Revolut is granted a licence, it is likely to be on a temporary and restricted basis, allowing deposit-taking for a limited period while the firm addresses operational shortcomings. This approach, known as “mobilisation,” is typically employed when firms are in the process of resolving outstanding issues before implementing comprehensive changes.

Revolut’s executives, including Storonsky, have expressed frustration with the slow pace of the application process and have criticized the UK’s business environment, highlighting high taxes and what they perceive as excessive bureaucracy from regulators. Storonsky suggested that the company might choose to list in the US rather than London if it were to go public. These comments pose a challenge to the government’s efforts to attract more businesses to the UK and its stock exchange.

Chancellor Jeremy Hunt has responded to the concerns, urging concerned business leaders to engage in dialogue with ministers. He emphasized that regulators will soon be required to consider UK competitiveness and the government’s growth agenda in their daily operations. The government is introducing a growth duty for financial sector regulators to foster UK competitiveness, with a focus on supporting the success of fintech companies like Revolut.