Yes - protecting the deposit with a government-approved scheme within 30 days is a statutory duty under Housing Act 2004 s.213 for all assured shorthold tenancies in England and Wales. TDS is one of three approved schemes; using TDS specifically is not required, using one of them is.
The deposit must be protected within 30 days of the landlord RECEIVING it - day one is receipt, not the tenancy start. The prescribed information (scheme details, how to reclaim, what to do in disputes) must also be SERVED within those 30 days. Two duties, both with the same deadline, both independently claimable if missed.
Statutory protection: the money is held or insured, deductions are not the landlord's unilateral call, and a free adjudication/ADR service exists. The schemes do not enforce anything themselves - enforcement is county court - but their dispute outcomes are strong evidence in any claim.
Scheme membership is the requirement, not TDS by name. Landlords choose: Deposit Protection Service (DPS), MyDeposits, or Tenancy Deposit Scheme (TDS). All three satisfy s.213; skipping all three does not.
It is a breach of statutory duty with teeth: tenants claim 1-3x the deposit as compensation (s.214), and the landlord loses the s.21 no-fault eviction route until the deposit is protected and prescribed information served (s.215A).
Within 10 days of tenancy end: full return or itemised deductions proposal. Deductions need agreement or adjudication; keeping the deposit 'as compensation' for something is not a thing - the tenant would need to win it via the scheme or court.
Custodial protection is free (the scheme holds the money). Insurance-backed protection charges the landlord a fee per deposit. Tenants never pay for protection - any attempt to charge a tenant for scheme membership is a red flag.
No - any of the three approved schemes. There is no ranking; custodial DPS is the common free default, TDS insurance suits landlords who want the money in their account, MyDeposits likewise.
Unjustified retention breaches the 10-day rule and the tenancy; deductions require agreement, adjudication or a court judgment. Tenants enforce via the scheme's free dispute service or Money Claim Online with interest.