Revolut, a UK-based financial technology (fintech) company, is facing delays in securing a banking licence following questions from regulators over the accuracy of its

accounts, according to two people familiar with the situation. In March, BDO, the company's auditor, issued a qualified opinion on Revolut's 2021 accounts, noting that while the statements were a "true and fair view of the state of the group," some information related to revenues may have been "materially misstated." This prompted questions from financial regulators, with the company receiving multiple enquiries from regulators in the UK and overseas seeking further explanation about the auditor's opinion.

Concerns around the qualified opinion are likely to slow down the approval process for the banking licence, according to a person advising the company on strategy. Stephen Kingsley, a veteran non-executive director who has chaired a number of audit committees at financial firms, believes that the warning from BDO "casts a shadow on the board and shows a breakdown of trust between the auditor and the management." He adds that he would be "astonished" if regulators approve the banking licence.

Revolut applied for a banking licence around two years ago, with high standards required for approval from the Bank of England and the Financial Conduct Authority. With a banking licence, Revolut would become a more established player in the UK banking market and be able to draw more customers. Additionally, the deposits held at the fintech would be protected by the UK's financial compensation scheme, boosting trust among clients.

The scrutiny from regulators over Revolut's accounts is part of a wider trend, with banking regulators across the world increasing their focus on the financial health of lenders after the failure of some US banks and Credit Suisse's rescue by UBS. As a result, obtaining a banking licence has become more challenging, and Revolut's delay is a reflection of this.

Revolut has sought to reassure its investors about the soundness of its business after the publication of the 2021 accounts. The company has received a number of messages from investors expressing concerns and requiring explanations regarding the accounts. Revolut is now considering changing its auditor and hiring a bigger accounting firm.

Since its debut in 2015, Revolut has raised around $1.7bn from SoftBank and other investors, and posted its first full-year profit of £26m in 2021. In recent weeks, the company has told its backers that it does not need to raise further funds. Photo by Alex Guibord from Toronto, Canada, Wikimedia commons.