Fintech startup, Revolut told the customers of its UK entity to act ahead of the imminent loss of passporting rights for Europe in the wake of Britain’s exit from the European Union.
The British company, Revolut Trading Limited, will no longer be able to passport its services across the EEA from 1 January 2021 as the prospect of crashing out of the European Union without a trade deal looks increasingly likely.
Revolut further explains that the consequences of a hard Brexit scenario include that RTL customers will lose the protection previously provided by EU regulations. As such, in the event they have a complaint against the firm, they will not be able to complain to EU equivalents of the UK’s Financial Ombudsman Service (FOS) or obtain compensation under European regulations.
UK clients have until December 31 to decide what to do next. Either to continue trading with RTL and acknowledge that they can’t the benefit of EU regulatory protections or investor compensation schemes. Those who don’t like the changes proposed by Revolut will have to liquidate their trades and close their accounts by the end of the year.
The company also reminded those who will not act that their trading accounts will be frozen. “As of 1 January 2021, you will not be able to access our trading service – either to continue trading or to close your account – unless you give the required confirmation via the latest Revolut app,” it said.
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Headquarters will remain in London
Revolut has been quietly rushing to get Brexit contingency plans in place and already shifted business customers in Central and Eastern Europe from its London-based entity to Lithuania .
The challenger bank has secured a Specialised Banking License from the Bank of Lithuania, which allows it to offer and passport a wider range of solutions to customers in Europe. Revolut, which counts more than 300,000 Lithuanian customers, allowed users to transfer their accounts from an e-money account to a fully-fledged bank account. It hired between 40 and 50 people this year as it beefs up its operations there.
The fintech unicorn further explained that due to some differences between local regulations, they will ask some users to reverify their ID or provide details about their business when their accounts are migrated.
Revolut said earlier this year that though its headquarters will remain in London and that UK payments will be managed from there, it will shift responsibility for its European payments to Ireland and Lithuania after Brexit.