Welcome to The Fiscal Dispatch, Atticus Partners’ financial services newsletter. Once a month, we cover topical stories relating to financial services (FS) in Westminster and Whitehall.
In this edition, we look at Revolut’s UK banking license, student loans, Angela Rayner’s pitch to the City, and more.
Revolut finally scores UK banking license
The approval of Revolut’s long-awaited UK banking licence is a huge milestone in the British fintech space. It marks a politically significant moment for Britain’s ambition to remain a global financial centre. After a five-year process, Revolut has finally secured approval from the Bank of England and its supervisory arm, the Prudential Regulation Authority (PRA), enabling the fintech to operate as a fully authorised bank in the UK.
Founder Nikolay Storonsky has historically been vocal about the PRA’s inertia, and this approval closes a chapter marked by frustration with British regulators. The delays were linked to governance concerns, anti-money-laundering scrutiny, and questions over historic revenues. All of these fuelled fears that the company might prioritise New York over London for a future stock market listing, a move that would have damaged the government’s credibility and dented investor confidence.
Revolut’s case has been a politically sensitive topic for successive governments, who have all faced criticism that the country’s regulatory and listing framework is driving high-growth firms abroad. With a valuation of roughly £56bn, a future IPO on the London Stock Exchange would quickly place Revolut among the largest firms in the FTSE 100. At a time when several major companies have chosen US markets for higher valuations and deeper liquidity, securing a domestic listing would be a badly needed win for the City.
The politics of the decision are nuanced. Regulators are keen to show they remain rigorous after a series of fintech compliance scandals, while ministers want to demonstrate the UK is still an attractive home for innovation and capital. Granting Revolut a licence after years of scrutiny allows both narratives to coexist.
Treasury Committee explores financial challenges caused by student loan repayment system
The Treasury Committee has launched a formal inquiry into the student loan system, centring on whether repayment terms are fair, proportionate and effectively act as a tax on graduates. The inquiry will specifically examine the terms attached to Plan 2 loans (those taken out between 2012 and 2023), including the level of interest charges, the decision by the Chancellor to freeze the repayment threshold (as seen in the 2025 Autumn Budget), and the interaction between loan repayments and graduates’ broader marginal tax rates.
Campaigners like Martin Lewis have deemed the system unfair, arguing that it effectively acts as a tax on graduates, while the Chancellor Rachel Reeves maintains the system is necessary for funding higher education. Surveys indicate public opinion is split, with some calling for partial debt write-offs, while others support repayment under current rules.
The Committee inquiry is therefore not only a technical review of repayment terms but a broader investigation into fairness, affordability, and the long-term impact of student debt on younger generations.
Credit Comes Back
Sources in Westminster suggest that the Chancellor Rachel Reeves is stepping up efforts to position credit unions at the heart of the UK’s financial inclusion strategy, as HM Treasury unveils reforms to widen access to affordable finance. The changes, announced alongside Economic Secretary to the Treasury Lucy Rigby, will expand membership eligibility, bringing in students, retirees, and extended family members, while raising the cap on locality-based credit unions from three million to ten million potential members.
The overhaul of “common bond” rules is being framed as a modernisation of the sector, enabling credit unions to scale, merge, and compete more effectively with high-cost lenders. Officials argue the reforms will give millions more people access to lower-cost borrowing and secure savings options, while reinforcing community-based financial resilience during ongoing cost-of-living pressures.
City analysts view the move as part of a broader, quietly strategic push by Reeves to deliver on Labour’s mutuals agenda without direct market intervention. By backing credit unions to expand organically, the Treasury is signalling a preference for decentralised solutions to financial exclusion. However, questions remain over whether the sector can scale quickly enough to meet demand.
Rayner eyes the City as a route back to the limelight
Sources in the City suggest that Former Deputy Labour Leader and Deputy Prime Minister, Angela Rayner is orchestrating a high-stakes return to the political frontline, as she looks to move away from her personal tax controversy and adopt a position of authority and fiscal matters. After months of scrutiny regarding her historical tax affairs, allies are increasingly confident that the HMRC probe will be resolved by the May elections, clearing the path for her to take a more dominant role in the Parliamentary Labour Party.
Last week, Rayner joined a call hosted by BNP Paribas with London’s financial leaders, in which she is reported to have sought to dismantle the tax and spend archetype often associated with her wing of the party. She delivered a clear, ironclad message to City bosses: Labour will not borrow to fund a spending spree. This move is seen as a strategic charm offensive to win over sceptical investors and business moguls who fear economic instability. Rayner’s rhetoric centred on core pillars of fiscal discipline, emphasising that every policy will be fully costed and funded through growth, not debt, while positioning Labour as the party of safe hands for the British economy.
However, many critics remain doubtful about this centrist pivot, questioning whether Rayner can truly balance her trade union roots with her new-found fiscal conservatism. However, reports highlight that her alignment with the Chancellor Rachel Reeves’ iron discipline is a necessary evolution to secure electoral victory. By anchoring her comeback in economic responsibility, Rayner is attempting to redefine the very identity of the Labour leadership. As the May elections loom, her ability to marry social ambition with budgetary restraint will be the ultimate test of her political longevity.
FCA Probes SME Finance Gap
The Financial Conduct Authority (FCA) has launched a review into whether its own regulatory framework is constraining access to finance for UK start-ups and small and medium-sized enterprises (SMEs), amid concerns that demand for external funding remains unusually weak by international standards.
The move signals growing scrutiny of the structural barriers limiting SME borrowing and investment, particularly at a time when policymakers are seeking to unlock growth across the economy. Graeme Reynolds, the FCA’s Director of Competition, emphasised the importance of timely access to finance for SMEs, noting the regulator is actively seeking industry input on how its rules may be shaping both cost and risk perceptions among lenders.
The review follows fresh data from the British Business Bank highlighting persistent gaps in SME financing, especially for early-stage firms, smaller loan sizes, and businesses built on intellectual property. While competition remains strong in low-risk and secured lending, pricing across other segments remains elevated due to structural constraints, reinforcing concerns that viable businesses may be underserved.
The FCA will examine the full spectrum of funding channels, including debt, equity, hybrid and alternative finance, and is particularly focused on rules that may be increasing friction or discouraging supply.
Importantly, the regulator acknowledged the role of the Prudential Regulation Authority (PRA) in shaping lending through capital requirements, suggesting any systemic issues may require cross-regulatory coordination. With parallel reviews underway across the Treasury, Bank of England and Department for Business & Trade, the outcome could mark a broader rethink of how the UK finances innovation and growth.
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