This post is about the need for the money used for investment to be held in a regulated financial institution.
The money being used for investment must be held in one or more financial institutions (for example a bank or building society), each of which must be regulated by the appropriate regulator in the country where the applicant is operating.
To hold money on someone’s behalf, the financial institution must first be authorised by its home regulator and meet the minimum requirements to safeguard these funds. This activity can be called ‘deposit-taking’.
Money held in a financial institution not regulated by the home regulator cannot be accepted for the award of points.
The authorisation process is split between the FCA and the PRA. Firms which carry out PRA-regulated activities as a bank, credit union, insurer or managing agent of a Lloyds syndicate need to apply to the PRA for authorisation.
However, authorisation will not be granted unless the FCA is also satisfied. Firms who are dual regulated must apply to the PRA unless directed otherwise. Solo regulated firms, for example e-money institutions and payments service institutions and other providers will need to apply to the FCA for authorisation.
Firms who apply to the FCA or PRA for registration may not carry on regulated activities until their registration is complete. This may take 3 months or longer in some cases.
A financial institution regulated by the home regulator must confirm the money is available. The home regulator is an official financial regulatory body, in the country where the financial institution operates and the funds are located. The regulatory body must be appropriate for the type of financial transaction.
Money held in the UK must be in an institution regulated by the FCA and the PRA.
Evidence of money from a financial institution is not acceptable if the Home Office is unable to make satisfactory verification checks. For a list of financial institutions which do not satisfactorily verify financial statements, see related link: Appendix P of the Immigration Rules. This is currently only for overseas institutions in certain countries. Checks on whether or not a financial institution is regulated by the home regulator can be made by accessing the appropriate website and/or by contacting the institution directly.