The Bank of England’s Prudential Regulation Authority (PRA) issued what is known as a section 166 earlier this year to investigate risks surrounding the speed of Revolut’s product launches, the Financial Times (FT) reported Tuesday (Oct. 27).
The report, citing sources familiar with the matter, said the order was made around the time Revolut obtained its long-awaited full banking license in March and is designed to test the strength of the FinTech’s internal systems.
As the FT notes, Revolut has amassed a customer base of more than 80 million in a little more than a decade, and is valued at $115 billion.
With a section 166, a company is required to appoint advisors to examine its systems and controls, the report added. Typically this process involves an investigation by accountants and lawyers who will suggest improvements where necessary. If the review uncovers failures, the company could face penalties or enforcement actions.
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Both Revolut and The Bank of England declined to comment when reached by PYMNTS.
The FT points out that Revolut’s rapid growth has involved a business model that covers things like cryptocurrency trading, subscription services and card payments, with CEO Nik Storonsky telling his team to act like “self-guided missiles” with little oversight to launch new products.
This approach has caught the attention of regulators. Last year, the European Central Bank (ECB) imposed growth restrictions on Revolut after it found what it called “deficiencies” in the company’s process for approving new products.
The ECB ordered that Revolut conduct a third-party review of its risk, compliance and legal functions governing new product launches in Europe.
And the FT had reported last year that the Bank of England had held off on granting Revolut a license due to worries about whether its risk controls could keep up with its rapid expansion into new territories.
The news comes one day after Revolut introduced its first credit product since becoming a licensed U.K. bank. The FinTech’s unsecured personal loans offering allows users to borrow between 2,000 pounds (around $2,700) and 25,000 pounds (around $33,000), repayable over one to five years.
“U.K. consumers can face unnecessary friction and complex fee structures when borrowing,” Revolut U.K. CEO Francesca Carlesi said in a news release.
“We’ve built a transparent and simple loan process with near-instant funds on approval, no fee for early repayment and competitive rates. Plus, by bringing credit into the Revolut ecosystem, customers can see exactly how their repayments fit alongside their day-to-day budgeting, spending and investing all in one place.”
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