Deposit aggregators: key considerations for charity trustees and auditors

A deposit aggregator is a platform that allows an organisation to place cash with multiple banks and building societies through a single account. Instead of opening separate accounts with individual banks, the charity places money with the aggregator, which then allocates funds across its partner banks according to the charity’s instructions.

Charities use aggregators for several reasons:

• Convenience: one onboarding process instead of multiple bank applications.
• Diversification: spreading deposits across several institutions reduces concentration risk.
• Improved returns: access to a wider range of deposit rates.

A key issue for trustees is understanding who they are actually depositing money with. Many aggregators operate using a trust structure. The charity pays money into an account held by the aggregator (or a nominee company). The aggregator then places the funds with the underlying banks. This means the charity is not a direct customer of each bank but a beneficiary under the trust.

This has consequences:

• The charity may not be named on the underlying bank’s records.
• Statements and confirmations come from the aggregator, not from each bank.
• The aggregator holds legal title to the funds; the charity holds beneficial title.

Trustees must read the aggregator’s terms carefully to understand this structure and their rights. They should ensure the contract terms describe how funds are safeguarded, how client money is segregated, and what happens if the aggregator becomes insolvent.

Using a trust structure raises the question: is the charity exposed to the aggregator’s financial stability? In most models, client funds are held in segregated trust accounts and should not form part of the aggregator’s own assets.

However, trustees should assess:

• Client money arrangements: are funds clearly held separately from the aggregator’s own money?
• Operational controls: how is cash transferred, reconciled and monitored?
• Legal enforceability: would the trust structure protect the funds in a wind-up scenario?

The underlying bank still carries its own credit risk. However, if the aggregator were to fail operationally (e.g., systems or administrative failure), there could be delays in accessing the funds.

Auditors face practical issues when a charity uses an aggregator:

• The charity may have no direct relationship with the banks holding the cash. Sending standard bank confirmation letters (e.g., to bank X where deposits are held) may fail, because the bank only recognises the aggregator as the account holder.
• The aggregator must instead provide confirmation of balances and the identity of the underlying banks.
• Auditors need to evaluate whether the aggregator’s confirmation is reliable and whether the trust structure provides sufficient audit evidence.

Early communication with the charity and the aggregator is essential to avoid delays.

FSCS protection is a government-backed safety net that compensates eligible depositors if a bank or building society fails, giving charities up to £120,000 of protection per authorised institution. This is important because it reduces the risk of losing funds that are vital to the charity’s operations.

Trustees often assume that spreading funds across banks automatically gives access to multiple layers of FSCS protection. In many trust-based aggregator arrangements, FSCS will “look through” the trust and treat each beneficiary separately. This means the charity should receive up to the standard FSCS limit for each bank used. Importantly, the limit covers all accounts held in a bank by the charity, i.e., also accounts held directly outside the aggregator arrangements.

However, FSCS eligibility depends on specific documentation and regulatory status. Trustees should confirm:

• Whether the aggregator is holding funds as a client money trustee.
• Whether the underlying banks have acknowledged the trust arrangement.
• Whether FSCS has confirmed look-through protection applies.

Not all aggregators provide an AAF 01/20 assurance report, setting out how they manage client money and operate their internal controls. These reports are important for auditors because they allow reliance on tested controls, reducing the need for detailed walkthroughs or additional audit evidence. In addition, if aggregated funds are held under a trust arrangement, banks are unlikely to provide bank confirmation letters to auditors.

While auditors may be able to confirm funds placed with the aggregator, for example by observing staff access online platforms, this may not provide sufficient audit evidence because charity staff are accessing the aggregator platform rather than online statements from the banks.

As a result, auditors may request charities to withdraw funds and then perform the audit test once the funds are in the charity’s own bank account. Charities may then reinvest the funds via the aggregators but may forego interest in the process.

• Understand the legal structure: who holds the end account with the bank and how funds are protected.
• Assess counterparty and operational risk, not just the credit risk of the banks.
• Confirm FSCS eligibility for the charity’s deposits and be aware that the FSCS protection limit applies to all accounts held with the bank.
• Ensure auditors can obtain suitable bank or platform confirmations or agree in advance with auditors what evidence they will require.
• Check if the aggregator produces a report on their internal controls (AAF 01/20).
• Document decisions and show that the board has considered risk, not just interest rates.

Deposit aggregators can be a very helpful tool for charities, but trustees must recognise the additional layers of risk and complexity that come with any intermediary handling charity funds.

• Read the Financial Conduct Authority’s April 2021 ‘Dear CEO’ letter on Obtaining Deposits via Deposit Aggregators
• Read the Bank of England’s November 2023 circular to banks about deposit aggregators