Revolut Faces Over €11m Fine for Unfair Commercial Practices
Revolut, a prominent digital banking and financial services provider, has been hit with a penalty of more than €11m ($12.6m) by Italy’s competition authority due to unfair commercial practices, violating the Consumer Code. This hefty fine has been levied against several entities within the Revolut group, namely Revolut Securities Europe UAB and Revolut Group Holdings.
Violations Leading to the Fine
The competition watchdog stated that these companies had violated Articles 20, 21, and 22 of the Consumer Code, leading to a fine of €5m. The violations revolve around the lack of clear communication to customers about additional charges and restrictions tied to the “commission-free” investing. This absence of transparent communication occurred at the earliest stage of customer contact.
The authority also found issues with the trading of fractional shares. It noted that these can differ significantly from full shares in terms of risk profile, investor rights, and transferability. This lack of clarity and potential misunderstanding for consumers contributed further to the violation of the Consumer Code.
Aggressive Approach to Account Limitations
The regulator also imposed a further €5m fine on Revolut Group Holdings and Revolut Bank UAB for their approach to suspending, limiting, or blocking payment accounts, which it deemed as “aggressive”. It found that essential information about terms and processes was either missing or not clearly presented to the customers. This lack of transparency and the aggressive approach violated Articles 20, 21, 22, 24, and 25 of the Consumer Code.
According to the authority, users were not provided with adequate pre-contractual details, were not warned in advance before the restrictions took effect, and were not offered an opportunity to respond or sufficient support after limits were applied. This restricted access to funds and related services, sometimes for lengthy periods, can prevent customers from exercising contractual rights and covering daily needs, including urgent expenses.
Failure to Clearly State Requirements for Italian IBAN
In addition to the above, Revolut Group Holdings and Revolut Bank UAB were fined €1.5m for not clearly outlining the requirements and expected timing for obtaining an Italian IBAN (starting “IT”) instead of a Lithuanian IBAN (starting “LT”). This action of the firms was deemed by the watchdog as a violation of Articles 20, 21, and 22 of the Consumer Code.
This series of fines highlights the importance of clear communication and transparency in the operations of financial service providers. It also underscores the need for companies to adhere strictly to the provisions of the Consumer Code to ensure fairness and protect the rights of consumers.
For more information, you can read the original report here.
