Bank of England governor denies rift with government over Revolut
Bank of England Governor Andrew Bailey recently addressed concerns surrounding the delays in granting fintech giant Revolut’s bank license. In an interview with CNBC, Bailey emphasized that there has been no rift between the Bank of England and the U.K. government regarding the approval process for Revolut’s banking license.
The Financial Times had reported that a meeting scheduled between British Finance Minister Rachel Reeves, Revolut, and the Prudential Regulation Authority (PRA) was canceled following Bailey’s intervention. Despite the cancellation, Bailey clarified that there is no discord between him and Reeves, and both entities maintain a strong relationship.
The authorization of Revolut as a fully licensed bank has become a significant issue for the U.K. government, especially amidst challenges from tech industry leaders regarding tax changes affecting the wealthy. While Bailey refrained from commenting extensively on Revolut’s case, he mentioned that the PRA is actively working with the digital banking startup during its mobilization process.
Revolut received a banking license with restrictions from the U.K.’s PRA in July 2024, marking the culmination of a lengthy application process that commenced in 2021. This milestone transitioned Revolut into the mobilization phase, where the company is limited to holding £50,000 of total customer deposits, significantly lower than traditional high street lenders.
Customers in the U.K. continue to be served by Revolut’s e-money unit rather than its banking entity, which means they are not directly covered by the Financial Services Compensation Scheme. This delay in Revolut’s full banking license has drawn criticism from the U.K. tech industry, prompting calls for the government to enhance its competitiveness globally.
Bailey emphasized that financial stability and economic growth are not mutually exclusive and expressed openness to regulatory changes to support the flourishing fintech sector. He stated, “We are very open to making changes where they’re appropriate,” signaling a willingness to adapt regulations to facilitate innovation and growth in the industry.
Overall, the delay in Revolut’s bank license approval process has sparked discussions about regulatory frameworks, the fintech sector’s potential, and the government’s role in fostering innovation and competition. As Revolut navigates through the mobilization phase, stakeholders are closely monitoring developments to gauge the impact on the broader financial landscape.
