Monzo, a UK-based fintech, faces scrutiny from the Competition and Markets Authority (CMA) for multiple regulatory breaches, deemed ‘especially concerning’.
- The CMA highlighted Monzo’s failure to comply with four sections of the Retail Banking Market Investigation Order 2017, including inaccurate service quality surveys and poor disclosure of account charges.
- Monzo has not responded promptly to the CMA about these breaches, with similar issues arising since February 2022.
- Despite these breaches, the CMA has chosen not to pursue formal enforcement actions against Monzo at this time.
- Monzo’s proactive response to rectifying these issues has been noted, although the company’s co-founder criticised regulatory bodies publicly.
Monzo, a prominent fintech company in the United Kingdom, has been reprimanded by the Competition and Markets Authority (CMA) for various regulatory breaches. These have been described as ‘especially concerning’ by Colin Garland, director of markets at the CMA, who communicated these findings to the company. The breaches relate to Monzo’s failure to adhere to four sections of the Retail Banking Market Investigation Order 2017, which aims to enhance competitiveness in the retail banking sector.
Among the specific breaches listed, Monzo was found to have published inaccurate surveys regarding the quality of their banking services. Additionally, the bank failed to correctly disclose the monthly maximum charge associated with its current accounts and did not publish the representative rate for loans on its business banking platform. A significant compliance issue noted was Monzo’s delay in notifying the CMA of these breaches within the stipulated 14 days of awareness, which is a requirement under the regulatory order.
Garland expressed concern over Monzo’s repeated breaches, pointing out a similar occurrence in February 2022 when the bank did not sufficiently disclose the monthly minimum charge for personal current accounts. Despite the gravity of these breaches, the CMA, for the time being, has opted not to engage in further formal enforcement action against Monzo. A spokesperson for Monzo has confirmed that the company has taken proactive steps to correct these historical issues and emphasised their commitment to regulatory compliance by implementing measures to prevent future occurrences.
This scrutiny of Monzo’s practices arises in the wake of another incident where Starling Bank, another challenger bank, was fined £29 million for inadequate financial crime prevention measures. Interestingly, Tom Blomfield, co-founder and former CEO of Monzo, publicly criticised competition regulators. On social media, he likened regulators to ‘religious zealots’, suggesting they operate with rigid adherence to regulatory frameworks without considering alternative approaches. Blomfield’s comments came shortly after similar regulatory scrutiny in the US involving Google’s web browser, Chrome.
The persistent regulatory challenges faced by Monzo underscore the critical importance of adherence to financial regulations to maintain competitive integrity in the banking sector.
