Shearman & Sterling LLP | FinReg | UK Regulators Publish Dear CEO Letter for Banks and Building Societies on Deposit Aggregators
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  • UK Regulators Publish Dear CEO Letter for Banks and Building Societies on Deposit Aggregators

    The U.K. Prudential Regulation Authority and Financial Conduct Authority have published a joint Dear CEO letter addressed to CEOs of U.K. banks and building societies on the risks of accepting deposits from deposit aggregators.

    Deposit aggregators interpose themselves between account providers and retail customers, offering services such as information on market savings rates, enabling customers to spread their savings across different providers and providing a platform for customers to accounts across different providers. In some cases, deposit aggregators become direct clients of account providers, holding those accounts on trust for retail customers.

    The PRA and FCA have identified certain risks associated with the functions performed by deposit aggregators. These relate to the processing and extent of FSCS protection where deposit aggregators are involved in customers' accounts, potential liability of account  providers for financial promotions made by deposit aggregators, the need for appropriate recovery and resolution plans to account for the involvement of deposit aggregators, and potential concentrated liquidity risk where deposit aggregators represent a significant portion of a bank's balance sheet.

    Firms are advised to consider and address any risks posed by deposit account aggregators relevant to their businesses and should review the extent of their exposure to aggregators. They should also contemplate measures to achieve faster FSCS compensation payments for customers, as well as greater transparency around FSCS protection.

    View the FCA's Dear CEO Letter.

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