Investment platform Lightyear announces that it received direct authorization from the Financial Conduct Authority (FCA) earlier this year, and will be relaunching for consumers and businesses in the UK, with FSCS protection, ISAs and more.
Lightyear has been regulated in the UK as an appointed representative of RiskSave Technologies Ltd, who are authorized and regulated by the Financial Conduct Authority.
This appointed representative (AR) designation allows brokerages like Lightyear to get started quickly, authorizing them to carry out “regulated services on a FCA regulated principal firm’s behalf.”
Having secured direct authorization from the FCA, Lightyear is now announcing that it is officially relaunching operations in the UK.
Under the authorized firm– Lightyear UK – customers will benefit from the Financial Services Compensation Scheme (FSCS), something “only available to investment firms who are directly authorized.”
This protects assets up to the FSCS limit of “£85,000 per customer, per financial institution.”
In preparation for this relaunch in January, Lightyear has been building out a UK team.
Alongside new hires in its London office, it announces that Wander Rutgers, Lightyear’s COO, has stepped into a UK CEO role.
Prior to becoming COO at Lightyear in May of 2022, Wander was the President of the UK for Robinhood, and before this led expansion at Wise (prev. Transferwise) and product at Plum.
This FCA authorization enables Lightyear to launch a number of new products in the UK. The platform announces that it will “be launching ISAs, in time for the end of this tax year.”
The Autumn Budget demonstrated that the government is encouraging people in the UK to build long term investment strategies; they increased capital gains tax “from 20% to just 24%, not the rumored 40%, and there was no introduction to ISA limits, which were also rumored to be announced.”
These products have high fees, limited flexibility and limited instrument options.
They don’t offer a good solution for people in the UK to “save for their future.”
As for Fintech options, a number of companies have “tried and failed to compete here.”
This is because they only build for one market: many US platforms have attempted to expand into the UK, but have been “unsuccessful, forgetting that the UK has a different currency, different tax systems and very different regulatory structures.”
People treat money differently here and have different attitudes towards investing; although we “share a language with the US, the UK is not the 51st state of America.”
The Fintechs that do exist hold a “tiny share” of the market.
And they either have lots of “caveats” and fees like the incumbents, or they’re cross-subsiding with “risky gambling-like products”; on the surface they may offer some of the top rates or advertise free trading, but “beneath this they have a sustainability strategy that relies on making money from taking bets against customers by offering instruments like CFDs – you can see on their websites that 80% of their customers lose money using these.”
Lightyear is firmly against this ‘casino-style’ approach. Instead, we’re building an investment platform that people will “trust with their long term wealth.”
They’re targeting the same customers that use platforms like Hargreaves Lansdown, but they’re claiming not charging the “massive fees, or making the experience really clunky.”
Unlike others who’ve tried to enter the UK with “no experience,” they’ve been live here since the start, so they claim to have experience in the UK, combined with years of experience building “a ‘global-local’ tailored product in each of our other 21 markets.”
This marks the start of their journey to become the “best” investing platform for the UK.
Lightyear is an approachable way to invest money without unnecessary barriers or fees.
Founded in October 2020 by Martin Sokk and Mihkel Aamer, both early Wise (formerly TransferWise) employees, Lightyear has “offices in London, UK and Tallinn, Estonia.”
Lightyear Europe AS is authorized and regulated as an “investment firm by the Estonian Financial Supervision Authority having the right to provide services in all EU and EEA countries.”
In the UK, the company Lightyear Financial Ltd is an appointed representative of RiskSave, authorised and “regulated by the Financial Conduct Authority.”
The company has raised $35 million and is backed by the following: Lightspeed Venture Partners, Mosaic Ventures, Metaplanet and Taavet+Sten.
Other investors reportedly include the following: Sir Richard Branson and early Monzo backer and HM Treasury Special Envoy for Fintech Eileen Burbidge MBE.
