The Italian Competition Authority (AGCM) has imposed a fine of 11.5 million euros on the company for having carried out alleged unfair commercial practices, including misleading advertising about its investment services through messages that hid the costs of commissions for the client. “Revolut has spread misleading messages about the investment services it offers and has used aggressive and deceptive practices in the management of its banking services,” the regulator states. The group has denied the accusations and has announced that it will appeal the sanctions.
The competition regulator announced this Thursday that the sanction is divided into three main blocks that affect different subsidiaries of the group: Revolut Securities Europe UAB, Revolut Group Holdings Ltd and Revolut Bank UAB.
Specifically, Revolut Securities Europe UAB, the subsidiary of the financial group that offers investment services in Europe, and Revolut Group Holdings Ltd are fined €5 million for violating consumer protection rules by failing to provide their clients with “clear and complete information” about additional costs and charges. The authority has stressed that it was not warned that fractional shares present notable differences compared to whole shares in terms of risks and rights.
Fractional shares are portions of a complete share of a company, designed to facilitate investment and are increasingly popular among small investors, since this instrument allows diversifying the portfolio with less capital. However, they present significant differences compared to full titles, both in terms of rights, risks and ease of transfer. For example, one of the critical points of fractional shares is that they are difficult to transfer, especially outside the platform that issues them. They cannot always be sold at any time and also depend largely on the operations of the issuing platform, such as in this case Revolut. Furthermore, they may involve additional costs or higher differentials, which ultimately reduce profitability.
The competition regulator, which also ensures consumer rights, has also fined Revolut Group Holdings Ltd and Revolut Bank UAB, the group company, another 5 million euros for having managed their financial products with “aggressive modalities,” and “having omitted or provided unclear information” about the conditions and procedures for suspending, limiting and blocking payment accounts. “Specifically, the companies did not provide sufficient information in the pre-contractual phase, nor did they notify in advance when the restrictions were going to be adopted, nor did they offer adequate dialogue or assistance once the restrictions were applied,” the regulator stated.
Account blocks or suspensions, which temporarily prevent a customer from using their money during that period, occur quite frequently at Revolut. As they explain on their website, they are usually due to identity verification reasons, suspicious activity or internal reviews.
For the Italian regulatory body, the lack of access to funds for prolonged periods affects the contractual rights and “the ability to cover urgent vital needs” of the client, which constitutes conduct that can unduly influence the freedom of decision of consumers and small businesses.
Finally, the Competition Authority has applied an additional penalty of 1.5 million euros to the same two companies for not clearly explaining the requirements and deadlines for obtaining a bank account with the Italian IBAN, instead of the Lithuanian one.
Initially, Revolut offered its European customers accounts with a Lithuanian IBAN, as its European banking license is registered in Lithuania, under the main supervision of the Bank of Lithuania and in coordination with the European Central Bank. Currently, in some countries, such as Italy or Spain, Revolut can also assign local IBANs, allowing customers to have nationally numbered accounts and greater compatibility with local banking systems.
The financial group has rejected the accusations of the Italian authorities, stating that it “does not agree at all” with the conclusions of the AGCM and has indicated, through a statement, that it will appeal the fine. Revolut has also assured that it is “convinced” that its communications “are clear and transparent.” And he added: “The protection of our millions of customers is our top priority. We operate in accordance with strict Italian banking regulations. Account verifications are mandatory and necessary to protect our customers and the integrity of the financial system.”
Satisfaction among consumers
Consumer defense associations have welcomed the sanctions against Revolut. CODACONS, one of the main Italian associations for the defense of consumers and the environment, has expressed “its satisfaction” with the fine imposed on the financial group. “We have been warning users for some time about the dangers hidden behind the investment and financial services sector, an area in which clients are often lured with promises of easy profits and particularly advantageous economic conditions that, in reality, do not turn out to be such,” the organization explained.
And he has denounced that “the dissemination of incomplete information about the risks of investments and misleading messages about the economic conditions applied cause direct harm to citizens and the market, diverting enormous resources from savers and reducing the advantages in terms of profitability and profits.” He has also warned of the dangers of the “numerous investment proposals that in recent times have been transmitted through social networks, messaging applications or email”, which often turn out to be “genuine international scams”.
Federconsumatori, another large association that represents Italian consumers and defends their rights, has also applauded the regulator’s decision. “This case shows that numerous abuses continue to exist in a sector as delicate and important as the financial sector, where the asymmetry of information is usually evident and marked,” the organization noted. And he warned: “These financial instruments are increasingly used, especially among young people, for whom it is important to guarantee adequate financial education that allows them to know their rights and enforce them, as well as manage their resources consciously.”
