The Bank of England has ordered a review of the processes Revolut uses to approve products, examining internal controls as Revolut expands into personal lending. People familiar with the matter said the central bank's Prudential Regulation Authority issued a section 166 order earlier this year. The people said the review examines risks associated with Revolut's rapid introduction of financial products. The people said the order came around the time Revolut obtained a full banking licence in March, aiming to assess the strength of Revolut's internal systems.
A section 166 order, also called a skilled-person review, requires a regulated company to hire expert advisers to assess internal systems and controls. An accounting or legal firm usually conducts the investigation and produces recommendations for necessary improvements. The order serves as an evidence-gathering tool. Regulators can impose penalties or pursue other enforcement measures for rule breaches if the review identifies failures.
Revolut announced plans on Monday to provide unsecured personal loans ranging from £2,000 to £25,000. Revolut also announced a partnership with asset management firm Carne that will enable clients to invest in privately held technology companies. Revolut's business includes cryptocurrency trading, card payments and subscription services. Chief executive Nik Storonsky tells employees to operate like "self-guided missiles", developing products with limited oversight.
Revolut has attracted more than 80 million customers in little more than a decade. Revolut's $115 billion valuation exceeds those of three of the four biggest high street banks in Revolut's home market. The banking licence followed years of waiting as Revolut struggled to reassure regulators about rapid growth. The approval was regarded as essential to Revolut's ambition to operate in 70 countries by 2030, compared with 40 currently. The licence also enabled Revolut's UK bank to accept deposits and enter lending markets traditionally dominated by established banks.
However, Revolut's rapid expansion has also brought disputes with regulators. The European Central Bank imposed growth restrictions on Revolut last year after finding "deficiencies" in the processes used to approve new products. The ECB required Revolut to commission an external review of the risk, compliance and legal functions overseeing product launches in Europe. The Bank of England had delayed granting Revolut a licence because of concerns that risk controls might not match the rapid expansion of overseas operations.
Revolut and the Bank of England declined to comment.
Bank of England Orders Review of Revolut's Product Approval Processes
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Summary
The Bank of England has ordered a review of Revolut's product approval processes, focusing on internal controls ahead of its bitcoin ETF approval and expansion into personal lending. A section 166 order was issued by the Prudential Regulation Authority earlier this year, shortly after Revolut secured a full banking licence in March. The review will assess risks linked to Revolut's fast product launches and compliance with CFT (Countering the Financing of Terrorism) standards. The company recently partnered with Carne to offer unsecured loans and has a valuation of $115 billion. Past regulatory actions include ECB-imposed growth limits.
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