Regulation not biggest obstacle for challenger banks: Raffe

Regulation not biggest obstacle for challenger banks: Raffe

New banks face regulatory hurdles but other challenges, such as attracting customers, are more significant, Victoria Raffe, a former FCA director of authorisations has claimed.

Ms Raffe said regulators in the UK backed challenger banks but this was against a backdrop of ongoing change across the banking sector.

Ms Raffe, who announced she was leaving the regulator in December 2014 as part of structural changes along with fellow executive committee members Clive Adamson and Zitah McMillan, said there was “regulatory support” for challenger banks. She said: “The PRA and FCA did some reforms that have made becoming a bank easier.

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“The FCA did Project Innovate, which seems to stop regulators being a chill hand to new ways of thinking.”

Atom Bank at a glance
Authorised by the PRA but not yet launched
Employs approximately 100 people
Based in Durham
Focuses specifically on digital banking

She added: “There is always a raft of stuff from Europe. That said, while regulation is not an easy touch, it is not the most difficult thing you will face if you start a bank or are running a bank.”

She said other challenges – such as attracting customers and growing a bank – presented greater difficulties.

Her comments, at a seminar held in London last week by technology firm Fiserv, came after Atom Bank was granted its licence.

Anthony Thomson, who founded the bank but also helped found Metro Bank, which received its licence in 2010, said the authorisation process had become easier.

He said: “Our original application for Metro Bank was about 38 pages back in 2008.

Meanwhile, areas such as the mortgage market have seen new entrants appear.

June saw the launch of Pepper Homeloans, aiming to provide residential and buy-to-let mortgages to certain borrowers with adverse credit history, and the authorisation of second-charge master broker Fluent Money.

In the same month, intermediary-only specialist mortgage lender Kensington announced it had completed a securitisation of £508m.


In May challenger bank CivilisedInvestments committed bankers to swear an oath aimed at restoring consumer trust.

Jim Lawson, formerly of Cheshire-based JA Lawson Health and Life Insurance, who previously devised a one-page Financial Practitioners’ Oath, said: “We have had various different forms of regulation, from the FSA to the FCA and so on, but introducing an oath would be another way to make a difference.”