A fintech start-up which paid more than 3,000 influencers including Premier League footballers and Love Island stars to promote a debit card it claimed would be ‘one of the world’s most secure’ has been accused by the financial regulator of peddling its products without authorisation.
The Financial Conduct Authority issued a warning about Lanistar, which announced its ‘polymorphic bank card’ in an advertising campaign on Sunday, saying it was ‘not authorised by us and targeting people in the UK’ and ‘carrying on regulated activities which require authorisation.’
The warning notice even stated: ‘some firms act without our authorisation and some knowingly run investment scams.’
Lanistar, which was founded last year, paid 3,000 influencers to promote its new ‘polymorphic’ debit card on Instagram
But the company hit back at the regulator, saying it had asked the FCA to take down the warning notice and that it would be ‘partnering with firms that are authorised by the FCA to provide financial services or products’ when its new card actually launched in January 2021.
The dispute between the regulator and Lanistar highlights issues surrounding the murky worlds of social media advertising of financial products and the regulation of fintech start-ups and the companies which provide the vital plumbing they need to work.
It comes only months after hundreds of thousands of people who used apps and cards powered by the UK arm of German payments processor Wirecard, often without their knowledge, had their funds frozen after action from the regulator.
Lanistar was launched last year and its Twitter account registered this January, but users are currently only able to download its app and register their interest.
Asked if the FCA had been too hasty in posting the warning before the company had even launched any products, the regulator said it couldn’t comment further but was in contact with Lanistar to obtain more information.
The company, which raised £15million from its founder Gurhan Kiziloz’s family earlier this year, launched the marketing campaign for its new card last weekend.
It signed up former Love Island contestants Amber Gill, Chris Hughes and Tommy Fury and footballers Karim Benzema, James Rodriguez and Kevin de Bruyne to promote it to their thousands and in some cases, millions, of followers on Instagram.
Among those paid to promote the new card – which will launch next January – were Manchester City midfielder Kevin de Bruyne and Love Island winner Amber Gill
In a post on Sunday night Manchester City midfielder de Bruyne, who has 12.2million Instagram followers, wrote: ‘The most secure card in the world has arrived. Pre-register before anyone else.’
A post by Gill, who won the reality show Love Island, said the same thing.
Lanistar has said it aims to be worth £1billion with a year of launching, with a promotional picture of its founder stood next to a unicorn sent to journalists on Monday morning.
Lanistar founder Gurhan Kiziloz hopes for the company to be worth £1bn within a year of launch, which would make it a fintech unicorn
Kiziloz said in a statement: ‘I’m thrilled to be releasing Lanistar to the world to change the fintech landscape and give consumers a secure and superior customer experience.
‘This is the first step in our goal to reach a £1billion valuation and break records in our space, and we look forward to growing our user base ahead of our card launch in early 2021.’
Its card, which will be available for free as well as offering £3.99 and £14.99 a month options, will come with no personal details posted on it and will allow customers to generate one-time PINs and security codes for purchases or ATM withdrawals, which is why it claims it will be so secure.
Holders will also be able to load multiple cards onto the card’s app and choose between them, a service already offered by existing fintechs companies like Curve.
Lanistar claims its card would be among the world’s most secure – and that users could change the PIN number multiple times and set unique codes for each transaction
Although unregulated and therefore unable to issue its own cards, the company plans to rely on a variety of regulated card issuers like Transact Payments, which would enable it to work with Mastercard.
The tie-up with Mastercard was announced in mid-June, with the partnership enabling ‘Lanistar to launch and issue its new flagship debit card product to its UK customers, under Transact Payments.’
Mastercard said today it was ‘committed to driving choice and innovation in payments for people everywhere and supporting fintechs through our card issuing partners.’
Responding to the regulator’s post, Lanistar said in a statement: ‘Legal and regulatory compliance are central to Lanistar’s business and we confirm that we are not providing financial services or products without the FCA’s authorisation.
‘We have announced our intended future services and we will be partnering with firms that are authorised by the FCA to provide financial services or products.
‘We are in the process of contacting the FCA to clarify the position and will be requesting that the Notice is removed.’