FSCS cover on trust, client and nominee accounts

The Financial Services Compensation Scheme (FSCS) protects up to £120,000 per person or company, per authorised firm, when a bank, building society or credit union fails¹. The limit is not per account. It is per person, per firm, and it is counted across everything you hold with that firm, including money held for you through a savings platform or cash service³.

That single rule answers most of the questions people ask about trust, client and nominee arrangements. Where your money sits with a regulated bank, protection normally follows the money, even if the account is not in your own name. Where it sits with an e-money or payment firm, the FSCS cannot protect the firm itself⁴.

Joint accounts get more room: each named holder has their own £120,000 limit, so a joint account with two holders is protected up to £240,000⁵. And if a large sum lands in your account from a house sale or similar event, temporary high balance cover can reach £1.4 million for six months⁶.

FSCS protection: up to £120,000 per person, not per account

The headline figure is £120,000 per eligible person, per authorised firm². The FSCS states the protection limit as £120,000 per person per firm, and joint accounts are eligible up to the same limit of £120,000 per eligible person¹. The Bank of England's explainer puts it the same way: a joint account with two holders would be protected up to £240,000¹⁰.

The important word is firm, not account. Protection is across all accounts held within the bank or banking group, not per account¹¹. If you hold a current account, a savings account and a cash ISA with the same bank, the £120,000 is shared across all three. The FSCS covers deposits, current accounts and savings accounts, including money in current, saving and fixed-term deposit accounts⁴.

That is why the practical question is never "how many accounts do I have?" but "how many separate firms am I dealing with?" Two accounts with one bank are one pot. Two accounts with two banks that share a licence are also one pot, which is the point most people miss.

Money held for you through savings platforms and cash services

Savings platforms, cash services and deposit aggregators place your money with regulated banks rather than holding it themselves. The FSCS says that if an aggregator deposited your money with a regulated bank that then fails, it is likely that the FSCS will protect it⁴. The protection attaches to the bank holding the deposit, not to the platform's own balance sheet.

Some arrangements are explicit about the structure. Moneybox states that funds are FSCS protected and held on bare trust by Moneybox, which deposits the money with one or more banks from a panel of third party banks¹³. Chip states that savings deposits held in its savings accounts, powered by ClearBank, are covered by the FSCS subject to eligibility, and that pending transaction money held in its safeguarded client money account is also eligible following regulation changes in April 2023¹⁴.

The limit still applies per bank, not per platform. If a platform spreads £300,000 across three banks, each holding £100,000, each holding sits under the £120,000 limit. If it places the whole £300,000 with one bank, only £120,000 is protected. Because the platform chooses where the money goes, the reader's practical step is to ask which banks are used and how much sits with each.

Joint, business and company accounts: how the limit is shared

A joint account is treated as two separate claims, one per holder. Each eligible account holder has a separate FSCS limit, so a joint account with two holders is protected up to £240,000⁵. Providers describe it the same way: United Trust Bank states £240,000 per joint account, and Central Credit Union states joint accounts are covered up to £240,000¹⁷.

The sharing rule is where people come unstuck. If you have an individual account and a joint account within the same banking group, the £120,000 compensation limit applies across all these accounts, not to each separate account⁴. Your half of the joint account counts towards your own £120,000, alongside anything you hold individually with that group.

Companies get their own limit. The FSCS protects up to £120,000 per person or company, per authorised firm². A limited company is a separate legal person, so its deposits are counted separately from the directors' personal deposits, provided the company itself is eligible.

Temporary high balances: up to £1.4 million for six months

Some deposits are too large to fit the standard limit but are only there briefly. The FSCS can protect temporary high balances of up to £1.4 million for six months, covering qualifying sums such as money from the sale of a house⁶. MoneyHelper describes the same cover: the FSCS can compensate you for up to £1.4 million if the account was credited in the last six months²⁰.

The Building Societies Association notes that people with some types of temporary high balances have FSCS protection up to £1.4m for up to six months²¹. The cover is for exceptional and short-lived deposits resulting from certain major life events, not for money parked indefinitely⁵.

Two things matter in practice. First, the clock runs from when the money was credited or became legally transferable, so the six months is not open-ended. Second, these claims are more complex than standard deposit claims and take longer to settle than the seven working days that apply to ordinary deposits¹.

Where FSCS deposit protection does not apply

Deposit protection is narrower than many people assume. The FSCS cannot protect e-money or payment services firms, so a balance held with a payments firm is not covered in the way a bank account is⁴. The FCA's position is that the FSCS does not cover cases where the payments firm itself fails¹⁵.

Some insurance lines sit outside the scheme as well. Credit insurance, marine insurance and aviation insurance claims are not eligible for FSCS protection²². Mutual insurers do not appear in the FSCS protection checker, except credit unions that can take deposits²³.

There is also a debt advice exclusion. The FSCS does not protect money that a debtor pays under an individual voluntary arrangement arranged by insolvency partners, which are not regulated by the FCA, or money paid for debt advice²⁴.

Finally, the scheme only responds to a firm failure. The FSCS pays compensation if your financial services provider fails and cannot pay back your money itself²⁵. A dispute about poor service, a mis-sold product or a charge you think is unfair is a different route, handled by the firm's complaints process and then the Financial Ombudsman Service. The FSCS also requires that you have actually lost money²⁴.

How compensation is paid if a bank fails

For standard deposits, the FSCS pays automatically. If a bank or building society fails, the FSCS will automatically pay back customers' money within seven working days in most cases¹¹. The same timescale appears across its guidance: compensation is paid within seven working days of a bank, building society or credit union failing, with more complex cases, including temporary high balance claims, taking longer¹. The FSCS aims to pay deposit compensation within seven days of a failure in most cases⁹.

To be eligible, four conditions must all be met: the firm was authorised, it carried out a regulated activity for you, you lost money, and it owes you a legal liability²⁶. Most depositors are covered, and the FSCS can pay compensation to depositors if a bank is unable to meet its financial obligations²⁷.

There is no charge. The FSCS says it is completely free to claim, and describes itself as independent, free and funded by the financial services industry⁸. Where the FSCS pays compensation and later recovers money from the failed firm, it keeps recoveries up to the amount it has paid and pays any excess over to the depositor, subject to an allowance for costs²⁹.

A standard deposit claim is normally paid within seven working days; temporary high balance claims take longer.

What happens to a cash ISA if the bank fails

A cash ISA is a deposit, so it sits inside the same £120,000 per person, per firm limit as any other savings account¹⁰. It does not get a separate allowance, and it does not get a larger one. If you hold a cash ISA and a current account with the same bank, the two are added together against the single limit¹¹.

The tax wrapper is a separate matter from the compensation. Secure Trust Bank warns that if you choose to close the ISA and have your funds returned to you, the funds will lose their tax-free status³⁰. The same point appears in its maturity guidance: if you have a Cash ISA, consider that your funds will lose their tax-free status³².

In other words, compensation restores the money but not necessarily the ISA. A reader with a large cash ISA should think about how much sits with one firm before a failure happens, not after.

Checking a firm and getting help

The FSCS publishes a protection checker so you can confirm whether a firm, and the money you hold with it, is covered³³. Mutual insurers do not appear in that checker, except credit unions that can take deposits²³. If a firm is not listed, that is a prompt to ask the firm directly rather than an answer in itself.

Where a firm has failed, the FSCS handles compensation, and where the dispute is about how a firm treated you rather than its failure, the Financial Ombudsman Service is the route. The two do different jobs: the FSCS pays when a firm cannot, and the ombudsman resolves complaints about a firm that is still trading.

Free, impartial help is available. MoneyHelper explains how current accounts, joint accounts and savings products work, including the protection that applies to them²⁰. For anyone in Wales, Shelter Cymru provides money advice covering credit union loans and related debt questions³⁵. The FSCS's own guidance on making a claim sets out the process where a claim is needed²⁸.