Monzo fortifies investment and pension offerings amidst regulatory scrutiny

Monzo, the prominent UK digital challenger bank, is making significant strides in its wealth management division by deepening its partnership with Seccl, the Octopus-owned investment platform. This strategic move aims to expand Monzo’s investment and pension offerings, allowing it to introduce more sophisticated products and services to its rapidly growing customer base. This development, however, unfolds against a backdrop of heightened regulatory scrutiny, as Monzo recently faced a substantial fine from the Financial Conduct Authority (FCA) for shortcomings in its financial crime controls.

Fortifying Investment and Pension Offerings:

The collaboration between Monzo and Seccl, which commenced in January 2025, has progressed swiftly. Following a “smooth and successful technology integration,” the first assets were placed on Monzo’s new, Seccl-powered proposition in May. As of July, Seccl now powers all new Monzo investment accounts, a crucial step in streamlining its wealth management infrastructure. The next phase, scheduled for September, will involve the migration of assets for over 300,000 existing investment and pension account holders. This consolidation under Seccl’s platform will encompass critical functions such as custody, wrapper administration, and investment services, providing a robust operational backbone for Monzo’s expanding financial product suite. BlackRock, a global leader in asset management, will continue to manage the underlying funds available to Monzo’s customers, ensuring continued access to diverse and professionally managed investment options.

This strategic partnership is set to unlock a range of new features for Monzo customers. Foremost among these are the introduction of fully digital accumulation Self-Invested Personal Pensions (SIPPs). This will empower users to make new contributions and consolidate existing pensions seamlessly within the Monzo app, a significant step towards simplifying retirement planning for the modern digital consumer. Furthermore, Monzo will also introduce the ability to trade Exchange-Traded Funds (ETFs), offering customers greater flexibility and diversification in their investment portfolios. These additions build upon Monzo’s existing investment capabilities, which were first launched in September 2023 with Stocks and Shares ISAs and General Investment Accounts, and further enhanced in July 2024 with a pension tracing and consolidation service. This progressive rollout demonstrates Monzo’s commitment to building a comprehensive financial ecosystem within its app, aligning with its mission to “make money work for everyone” by demystifying investing and making it simple, transparent, and affordable.

Navigating Regulatory Challenges:

The timing of this significant business expansion is particularly noteworthy given Monzo’s recent regulatory challenges. The bank was recently hit with a £21.1 million fine by the FCA, following a four-year investigation into its anti-financial crime systems and controls. The FCA’s findings, which primarily focused on the period between October 2018 and August 2020, revealed “inadequate anti-financial crime systems and controls.” A critical failing highlighted was Monzo’s inability to adequately verify customer identities, leading to the onboarding of over 34,000 high-risk customers between August 2020 and June 2022, despite being under a mandate from the FCA to prevent this. Examples cited by the FCA included customers using “implausible addresses” such as Buckingham Palace or Monzo’s own headquarters during account applications, underscoring severe deficiencies in their onboarding processes.

This penalty is not an isolated incident within the UK digital banking sector. It marks the tenth fine imposed by the FCA on a bank for financial crime control failings in the last four years, with Monzo’s peer, Starling Bank, also receiving a £29 million fine in 2024 for similar lapses. These actions by the FCA underscore a clear message: rapid growth in the fintech space must be accompanied by robust governance and compliance frameworks. Therese Chambers, FCA Joint Executive Director of Enforcement and Market Oversight, unequivocally stated that “Banks are a vital line of defence in the collective fight against financial crime. They must have the systems in place to prevent the flow of ill-gotten gains into the financial system. Monzo fell far short of what we, and society, expect.”

Growth, Governance, and Future Outlook:

Despite the regulatory setback, Monzo has demonstrated impressive growth, acquiring over 5.2 million new customers between 2018 and 2022 and now holding a 2% market share of UK retail banking, according to GlobalData’s 2025 Financial Services Consumer Survey. In 2025, Monzo’s customer base surpassed 12 million, representing approximately 22% of the UK adult population. The bank also reported a significant increase in revenue, reaching £1.2 billion for the financial year ending March 2025, and an eightfold increase in adjusted pre-tax profits to £113.9 million. These figures highlight Monzo’s strong commercial performance and its growing influence in the UK banking landscape.

However, the FCA’s fine serves as a stark reminder that a “growth-first” culture, while instrumental in rapid scaling, can obscure critical regulatory and reputational risks if not balanced with equally robust internal controls. As Monzo continues to mature from a disruptive startup into a significant financial institution eyeing a potential IPO, its credibility will depend heavily on its ability to demonstrate that sound governance and compliance are embedded at its core, not merely an afterthought. The move to a more specialized platform like Seccl for investment and pension services could be interpreted as a step towards enhancing the control environment and ensuring the responsible handling of customer assets, a crucial factor in building lasting trust and maintaining market integrity. The integration of advanced features and the continued focus on customer-centric innovation, alongside a steadfast commitment to regulatory adherence, will be key to Monzo’s continued success and its aspiration to redefine banking for millions.