Personal Finance. Money. Investing.
Updated at 14:42

Kaarmann was recently fined £365,651 by Her Majesty’s Revenue and Customs for defaulting on a tax bill in 2018. At the time, a spokesperson for Wise said Kaarmann had submitted his personal tax returns for the 2017/18 tax year late but had since paid what he owed as well as the relevant penalties for missing the deadline. 

According to a statement from the fintech company, the UK’s Financial Conduct Authority (FCA) has now launched an investigation into the matter, with regulators looking into whether Wise’s CEO failed to meet regulatory obligations and standards. 

In the statement, Chair David Wells said, “The Board takes Kristo's tax default and the FCA's investigation very seriously. After reviewing the matter late last year the Board required that Kristo take remedial actions, including appointing professional tax advisors to ensure his personal tax matters are appropriately managed. The Board has also shared details of its own findings, assessment and actions with the FCA and will cooperate fully with the FCA as and when they require, while continuing to support Kristo in his role as CEO."


The Financial Conduct Authority (FCA) reported a tripling of lending to customers in 2020 alone. It is surely one of the notable positives out of restricted movements during the pandemic. But it is not just about ubiquity and lending growth. It is also the poster child for innovation in retail finance. BNPL shows us all what is possible when technology, e-commerce and consumer needs are matched well. What’s not to love?

An unregulated landscape

BNPL sits in a class of agreements between parties that is quite vast such as invoicing and gym memberships. As such it is largely unregulated and has been deliberately exempt from consumer credit laws and regulations. The decision to exempt it, some fifty years ago, was sensible at the time as the majority of these types of arrangements posed little risk. But unlike most of those traditional arrangements, BNPL is plain and simple, lending. It may appear to only separate the timing of purchasing goods or services from repayment, but it is a contractual agreement to make repayments, and it can lead to interest, and fees being charged. 

BNPL has the potential to overcommit the customer and cause harm if not conducted well. Therefore, being unregulated seems a little at odds with what most people might expect today, against a backdrop of increased consumer protections that focus on reducing detriment and harm from lending. Looking at how BNPL has evolved over these last few years, it feels that regulation and coverage by law are necessary and timely. 

Change is afoot

The industry is bracing itself, even pre-empting what might happen with BNPL, in order to get in front of it. The FCA led a detailed review of practices in unsecured credit – The Woolard Review. This review identified BNPL as being different from other forms of arrangements, exempt from consumer credit laws and regulated activity, and as presenting a high risk of consumer detriment.  Key areas of concern are around how it is used, promoted, understood, and whether good practices are in place to manage the risks and harm to customers. The FCA recommended it be brought within its perimeter of conduct rules, and the Treasury is consulting on making statutory changes that will remove current exemptions. 

In a sign of what is to come, the FCA has taken a pre-emptive strike on the main providers. Showing an intent to exercise its full powers, it recently issued publicly the findings of a review of the four largest providers of BNPL loans covering compliance with consumer contract regulations and consumer rights. It raised concerns in respect of contractual terms that were considered unlikely to comply with the rules. According to the FCA, the four providers involved have been ‘fully cooperative’ and ‘agreed’ to changes, including for some, a voluntary refund of inappropriately charged fees. 

Providers are pretty savvy though and it seems clear where this will likely end up – not too dissimilar from other forms of lending. Many providers are revising terms, providing new options for payment at the point of sale and creating more prominent messaging and options. Their internal practices are also sharpening up. Providers are strengthening their credit risk controls – adopting good practices in line with more traditional lending products (and providers) in assessing customer indebtedness and ability to afford repayments, as well as better overall management of their credit risks. 

However, it is important to note the requirements are not certain. The questions, as the Treasury put it, are – what is to be included within the scope (that is, what is no longer to be exempt) and what controls need to be in place to manage this. Their conundrum, remembering that BNPL looks and feels a lot like other types of arrangements, is: cast the statutory net too wide and they risk including arrangements that do not require such attention and may have unintentional ramifications on a wide range of practices. But, cast it too narrowly, and it is easy for providers to avoid any requirements by slightly tweaking their products and practices. 

Unregulated BNPL is becoming significant

Short-term interest-free credit used to purchase more substantial items (as labelled by the Treasury and FCA) is not what the lawmakers and regulators are concerned with – it is not what is growing rapidly or causing detriment to consumers. The focus of their attention is what they call unregulated BNPL agreements, which typically target lower value items, often non-essential and fast consumable items like clothing. This is big and growing with estimates of over £5 billion last year, and projections into the tens of billions by some analysts.

There is potential for BNPL to be much, much bigger

If the wider market foray into BNPL continues, it will likely cannibalise existing lending, particularly of credit cards, but it may also increase spending levels overall. Should BNPL purchases shift upward in value, this will see total exposures grow quickly. Individual online retail shopping amounts for BNPL are relatively low. But aggregating spending over multiple purchases for a customer mounts up. If purchases shift to more substantive goods – the territory of short-term interest-free items mentioned previously - it will account for a sizeable chunk of the quarter trillion-pound unsecured market. Having the largest BNPL providers sit outside the regulatory perimeter, or inconsistent practices between lenders, undermines the whole unsecured market. 

The outlook for BNPL providers

Analysis by Redburn, as reported in the FT, suggests BNPL providers that only offer this product are unlikely to be sustainable in the long run. Whilst they look attractive today, they will soon be outgunned by incumbent lenders. However, those able to deepen their offerings and relationships with a broader suite of products and services will see sustainable value, leveraging BNPL as an effective acquisition generator for new business. 

This reinforces a further point, that the type of customer who is attracted to and uses BNPL now is younger and without a credit history. Yes, BNPL may be  positive for greater financial inclusion, but it also points to a possible vulnerable customer group who are less aware, less financially astute, less resilient, and so more susceptible to harmful practices.  

Providers should therefore aim to build on that foundation with a very clear long-term perspective. A view that covers decades not just the next few years, this is how BNPL can become the backbone of how people spend on low to moderate purchases when requiring credit. 

About the author: Phillip Dransfield is Partner at 4most, a UK based, credit and life insurance risk consultancy and is recognised internationally as one of the most dynamic and successful risk consulting firms.  

Gemini’s survey of 2,300 people in the UK found 18% had some type of cryptocurrency investment, with nearly half  (45%) investing for the first time last year.

The research suggests a significant jump in crypto ownership across the past 12 months, with research from the Financial Conduct Authority (FCA) estimating that just 3.9% to 4.4% of Brits had invested in the asset last year. This jump coincides with a rally for the market, with Bitcoin reaching an all-time high of over $68,000 in November 2021.

In a comment, Gemini’s UK boss Blair Halliday said, “2021 was transformational for UK cryptocurrency ownership. Confidence in and awareness of crypto has increased dramatically.”

“We believe education is the key to enabling wider audiences to safely access and capitalise on the immense opportunities that crypto represents.”

An investigation into the nature of Staley’s relationship with Epstein, who died in prison, is still underway. Nonetheless, Staley is set to receive £2.4 million in pay, as well as a £120,000 pension allowance, for 2021. 

In a statement, the bank said: "In line with its normal procedures, the committee exercised its discretion to suspend the vesting of all of Mr Staley's unvested awards, pending further developments in respect of the regulatory and legal proceedings related to the ongoing Financial Conduct Authority and Prudential Regulatory Authority investigation regarding Mr Staley."

According to the report, Staley was paid approximately £25 million in his near-7-years at Barclays. He holds 18 million shares in the bank, including £3.3 million worth granted by Barclays as an “unvested” award for 2021-2023.  

Under Staley’s strategy for boosting the bank, Barclays profits rocketed to £8.4 billion. 

The FCA is seeking to reinforce its ability to prevent poor conduct following its botched handling of collapsed invent fund London Capital & Finance and a recent surge in online scams. 

The FCA has proposed that, from April 2023, firms must comply with a new consumer duty principle under which they must act to deliver good outcomes and value to customers. 

We want to see a higher level of consumer protection in retail financial markets, where firms compete vigorously in the interests of consumers. We also want to drive a healthy and successful financial services system in which firms can thrive and consumers can make informed choices about financial products and services,” the FCA said in a public consultation paper.

Currently, firms are required to treat their customers fairly and not mislead them. However, the FCA wants to take this a step further by pushing firms to show evidence of good outcomes, instead of just complying with product governance rules. 

The FCA has acknowledged the new duty of care will only be successful if properly enforced and has already announced an internal makeover which will allow for quicker intervention. 

In the past weeks, Binance has come under pressure from regulators across the world due to concerns over the use of crypto in money laundering and the risks it poses to consumers. In June, the FCA banned Binance from conducting any regulated activity within the UK and placed numerous requirements on the platform. 

In a document dated June 25, the FCA explains: "Based upon the Firm’s engagement to date, the FCA considers that the Firm is not capable of being effectively supervised. This is of particular concern in the context of the Firm’s membership of a global Group which offers complex and high-risk financial products, which pose a significant risk to consumers.”

A spokesman for Binance said that the crypto exchange platform has fully complied with all the FCA’s requirements and that it will continue to engage with the watchdog to resolve any outstanding issues. In Wednesday’s document, the FCA confirmed that Binance’s UK arm was not currently carrying out any regulated activity within the country and had not done so for over 12 months.

However, the FCA also said that it sent two requests for information about Binance’s wider global business model and its stock tokens. In the document, the UK watchdog said: "The FCA considers that the firm's responses to some questions amounted to a refusal to supply information.”

The move comes as part of a larger wave of opposition to the trading platform, as peers Santander and Barclays also block payments to Binance. Back in June, the Financial Conduct Authority (FCA) issued a warning against Binance, banning the trading platform from conducting any regulated activity in the UK, and advising consumers to be wary of advertisements that promised a high return on crypto assets investments. The FCA ordered Binance to remove all forms of advertising and promotions by 30 June.

NatWest has said it has seen high levels of cryptocurrency investment scams targeting customers across retail and business banking, a trend particularly prevalent across social media platforms. To protect its customers, the UK bank said that it was temporarily reducing the maximum daily amount that a customer can transfer to cryptocurrency exchanges. NatWest is also blocking payments to a number of cryptocurrency asset firms, where the bank notes some customers have already suffered fraud-related harm. However, despite the changes, NatWest has stated that customers will still be able to accept cryptocurrencies as a form of payment if they wish to do so. 

On Monday, numerous reports were circulating Twitter that claimed Binance had emailed customers regarding a suspension for maintenance on GBP withdrawals. The social media reports were confirmed by a statement on Clear Junction’s website. The statement cited a ruling by the Financial Conduct Authority (FCA) on the exchange. 

In June, the FCA ruled that Binance could no longer conduct any regulated activity within the United Kingdom and issued a consumer warning against the cryptocurrency platform. The FCA warned people to be wary of advertisements that promised high returns on crypto asset investments, and Binance was ordered to remove all advertisements and financial promotions by the end of the month. Binance was required to clearly state on its website and social media platforms that it was no longer permitted to operate in the UK. However, before Binance suspended GBP withdrawals, the platform’s users still had the option to buy cryptocurrencies and tokens in British pounds.

On Thursday, Lloyds Bank General Insurance (LBGI) received a fine of £90.6 million from the Financial Conduct Authority (FCA) for failing to clearly communicate with customers in letters sent between January 2009 and November 2007.

Between these dates, Lloyds and subsidiary Halifax sent out nearly 9 million renewal letters to home insurance customers. The letters implied customers were receiving a competitive price. However, LBGI did not check or provide evidence of the accuracy of the claims. In approximately 87% of cases, customers chose to renew their policies with the bank. In 2009, LBGI rewrote the letters and omitted problematic phrasing. However, the FCA has said the issue persisted beyond this year. There were issues identified with approximately 1.5 million letters and 1.2 million policy renewals. 

Customers may have received a quotation for a higher premium when renewing home insurance compared to previous policies, the FCA said. They also said that it is likely that the renewal premiums offered to customers were higher than the premium quoted to new customers or to customers who had decided to change to a different provider. 

Approximately half a million customers were also informed that they would receive a discount based on their loyalty to the bank. However, discounts were not applied and this issue was only identified and corrected by LBGI due to the FCA’s investigation.

Lloyds has apologised and said it has already returned money to some customers who were affected by its misleading insurance renewal letters.

On Monday, British bank Barclays said it is blocking its customers from using their debit and credit cards to make payments to crypto exchange Binance. The bank has been contacting customers who have used their cards on Binance in the past year and has advised them that they will be suspending payments until further notice.

The FCA, which is the UK’s highest financial auditing authority, issued a consumer warning on Saturday June 26, stating that Binance Markets Limited cannot undertake any regulated activity in the country. 

Following the FCA’s warning over the safety and security of Binance, there has been increased scrutiny from customers, banks, and regulators alike. The move by Barclays is not an isolated decision but instead comes as part of a wave of international action from state authorities, who are becoming increasingly concerned by the rapid rise of crypto and its potential for increased money laundering and organised crime. On June 21, the Chinese Government announced it would be clamping down on cryptocurrency mining, an announcement that saw Ethereum and Dogecoin prices drop.

The FCA has also issued a consumer warning against The financial regulator has advised people to be cautious of advertisements that promise high returns on crypto asset investments. The move comes as part of a pushback from global regulators against crypto-currency platforms.

 Binance is an online exchange where users can trade cryptocurrencies. The site offers its users a range of financial services and products and provides each trader with a crypto wallet where they can store digital funds. The online exchange also aids traders in their investment decisions through supporting programmes. 

 Binance Group was initially based in China but has since relocated to the Cayman Islands due to China’s increased regulation of cryptocurrency. Binance Markets Limited (BML_ is an affiliate firm of Binance, currently based in London.

 The FCA has said that BML is not currently permitted to undertake any regulated activities within the UK without prior written consent by the FCA. The firm has been given until Wednesday to comply with the ruling, with the FCA also stating that no entity of the Binance Group has the authority, registration, or licence to conduct regulated activity in the country. 

 The FCA does not regulate cryptocurrencies, but it does regulate crypto assets. To advertise or sell cryptocurrency products in the UK, companies must be authorised by the financial regulator.

Andrew Megson, Executive Chairman at My Pension Expert, looks at the sources of distrust in financial services and how the industry can turn its image around.

Today, the topic of trust in financial services looms large. With decades of mis-selling PPI, investment scandals, and zero industry transparency, it is little wonder that many individuals have a hard time engaging with financial advisers.

This is a crying shame. Advisers play a vital role in helping people develop a tailored financial strategy and achieve their monetary goals ­– the current climate of economic volatility has only accentuated their importance.

The financial pressures brought on by COVID-19 have upended many people’s financial strategies. Individuals have been forced to dip into their savings or, in some cases, even bring forward their retirement date due to redundancy. Naturally one would assume that it would pay to consult a professional when re-evaluating retirement and investment strategies.

Yet, Britons are still reluctant to seek advice. According to research from My Pension Expert less than two thirds (38%) of UK adults ever sought the help of an IFA. Even amongst those aged 55-plus and approaching retirement age, this figure stands at only 46%.

Such figures are concerning. They suggest that many people are making complex financial decisions unaided. And without an in-depth knowledge of the industry, or various financial products, they might find themselves worse off in the long term. Clearly, urgent action is needed.

Re-tracing the history of adviser fees

Adviser practices have certainly been questionable over the years, with little to no transparency surrounding how adviser fees were calculated, and many individuals in the industry working on commission and resorting to pushy sales tactics.

With decades of mis-selling PPI, investment scandals, and zero industry transparency, it is little wonder that many individuals have a hard time engaging with financial advisers.

Worryingly, My Pension Expert’s aforementioned survey revealed that almost one in five (18%) of individuals lost money following the recommendations of a financial adviser in the past. Likewise, a further 26% of UK adults said that they felt pressured into purchasing a financial product, despite not fully understanding what it was. And it these negative experiences that have shaped Britons’ opinion of advisers.

Thankfully, in 2012 the FCA took action to tackle unethical practices with the retail distribution review (RDR). This means that IFAs are now only able to offer fee-based advice.

But in spite of the great strides made by the FCA, the regulatory changes have not been enough to mend savers’ relationships with intermediaries. Indeed, many are steadfast in their belief that financial advisers will not act in their best interests.

Too much choice can be a bad thing 

As a consequence of such deep-rooted mistrust, many people prefer to make their own decisions about how to handle their pensions and investments.

This is troubling, as there are such a vast array of savings and investment products on the market for savers to choose from, individuals may fall victim to rushed and ill-informed decisions.

Indeed, too much choice can sabotage the ability to make well-reasoned and logical decisions. Research in academic settings, including a notable study conducted by Columbia University suggests that this is the case, as the group of subjects with more choices made knee-jerk decisions, compared those with fewer choices, who made their choices based on greater reason and individual preference.

Apply these insights to the world of financial planning, and problems start to rear their head. Our survey uncovered that the majority (65%) of individuals prefer to free guidance that can be found online, instead of seeking out independent financial advice. And although many will have a good grasp of their finances, relying solely on self-governed advice can be particularly harmful in the long-term.


Repairing broken bonds 

Clearly, the industry needs to do more to repair its damaged reputation.

In addition to the FCA’s work, a good start in this regard would be for the regulatory body to make the benefits of independent financial advice more widespread. Take for example, the fact that regulated financial advisers are obligated to reinstate an individual’s original financial position if their advice leaves them worse off. Few savers know this, and many might be more willing to take advice safe in this knowledge.

Further to this, the results of My Pension Expert’s survey suggests that individuals also want to see the FCA come down even harder on unscrupulous advisers, with the overwhelming majority (78%) of respondents stating that they wanted to see harsher punishments for IFAs engaging in unethical practice. Meanwhile, a similar number (73%) believe that tighter regulations surrounding independent financial advice are in order.

Ultimately, the financial services industry has some work to do when it comes to restoring its reputation. Particularly as the UK progresses along on its roadmap out of lockdown and the economy eventually stabilises, savers are likely to remain in need of regulated financial advice. Although it will not happen overnight, so long as the industry takes steps to improve transparency and public understanding, I have every confidence that individuals will be more willing to seek advice to secure their financial futures.

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