Head of Retail Financial Services | Commercial
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In a letter addressed to CEOs of deposit-takers on 6 November 2023, the Prudential Regulation Authority (PRA) has issued a timely reminder of issues that deposit-takers must consider if they are using deposit aggregators to source deposits.
These issues were first raised in a joint letter from the PRA and Financial Conduct Authority (FCA) on 16 April 2021 - with interest rates having risen significantly, depositors are now more able to achieve worthwhile returns on savings and turn to aggregators to help them do so.
The original letter preceded the consumer duty but, with the benefit of hindsight, makes the compelling point that banks have a duty to ensure that their customers understand how the relationship between customer-aggregator-bank works, and whether this may result in any significant differences to a "standard" deposit made by a customer with the bank. This is important when considering the level of Financial Services Compensation Scheme (FSCS) protection available and the speed with which any FSCS protection may pay out in the event of default (particularly under the aggregator "trust" model).
Consequently, banks must consider the entire distribution chain and all financial promotions and communications about deposits made via an aggregator service, to ensure that the customer has clarity on these issues.
If you require further advice on any of the above, please contact a member of our Financial Services team.