Accepting deposits
Accepting deposits

The following Financial Services guidance note provides comprehensive and up to date legal information covering:

  • Accepting deposits
  • The meaning of 'accepting deposits'
  • Money received by way of deposit
  • Lending or other activity financed by deposits
  • Regulatory requirements for those authorised to accept deposits
  • Applying for authorisation and varying permissions—accepting deposits

This Practice Note looks at the regulated activity of accepting deposits (often referred to as deposit taking). Accepting deposits is a key hallmark of banks, credit unions or building societies. Firms should consider whether their proposed business models and plans require the firm to apply for authorisation to carry on regulated activities or to extend their permissions. Accepting deposits is a specified activity and deposits are a specified investment under the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, SI 2001/544 (RAO).

The Financial Services and Markets Act 2000 (FSMA 2000) provides the framework for the regulation of financial services and markets in the UK. Under FSMA 2000, s 19, any person who carries on a regulated activity in the UK must be authorised by either the Financial Conduct Authority (FCA) or the Prudential Regulatory Authority (PRA) (depending on the regulated activities the person intends to carry on) or exempt. Breach of FSMA 2000, s 19 may be a criminal offence. The details of the specific activities and investments covered by FSMA 2000, s 19 are set out in RAO, which is secondary legislation under FSMA 2000.

The meaning of 'accepting deposits'

The regulated activity relating to deposit taking is the activity of accepting deposits as set out in RAO SI 2001/544, arts 5 and 74. The definition is also described