A spokesman for the Prudential Regulatory Authority confirmed that Paragon Bank was the first out of 21 candidates to successfully navigate the new regime, introduced last year to promote more competition in the banking sector.
She said the bank had successfully completed its application within the one-year time-frame set by the former FSA.
John Heron, managing director of Paragon Mortgages, said the Solihull-based bank would see the Paragon brand return to sectors where it had previously been “a major competitor”, such as car finance and personal loans.
Paragon Bank will initially offer car finance loans through brokers and car dealers, but will then move into the savings market in late spring.
Mr Heron said the savings range, which will include easy-access and fixed-rate savings accounts, will be available online and priced “competitively”. Paragon Bank will then offer personal loans through brokers towards the end of the year.
Dave Fishwick, the minibus entrepreneur and founder of Bank of Dave, has confirmed he is one of the 21 hopefuls currently in talks with the PRA.
Colin Rodger, managing director of Glasgow-based Alexander Sloan Financial Planning, said: “It is proving very difficult to find decent rates for clients wishing to hold parts of their pension in cash, so any new entrants who can offer better deals and simpler models, focused on deposit taking, should be welcomed.”