What happens if a bank or building society fails

If a bank, building society or credit union in the UK fails, the Financial Services Compensation Scheme (FSCS) steps in and returns your money. You do not have to make a claim: the FSCS pays automatically, up to £120,000 per eligible person, per banking licence, and usually within seven working days of the firm failing¹.

The limit applies to the person and the firm, not to each account. All the money you hold with one banking group, across current accounts, savings accounts and cash ISAs, counts together towards the single £120,000 limit⁴. Two holders of a joint account are protected up to £240,000 between them³. And where two brands you might think of as separate banks actually share one licence, they share one limit too, which is the single most common way people end up with more money at risk than they realise⁵.

Your savings are protected up to £120,000 per person, per bank

The FSCS protects eligible deposits up to £120,000 per eligible person, per bank, building society or credit union, for firms failing after 30 November 2025¹. The scheme is the UK's statutory compensation fund of last resort: it pays out when a financial services firm has failed and cannot repay its customers itself⁹. It only covers firms authorised by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA) to do business in the UK¹⁰.

Two details of how the limit works catch people out. First, it applies to individuals and companies, not to accounts: £120,000 spread across five accounts at one bank is one claim, not five⁸. Second, it applies per banking licence, not per brand, so the limit is measured against the authorised firm behind the brand names, which may be several high street names at once⁴.

The protection is automatic and free. The FSCS is funded by a levy on the authorised firms whose customers it protects, not by any charge to depositors³. Nothing you do, or pay, activates it: eligibility comes from holding a deposit with an authorised firm⁶.

What the limit does not do is protect everything connected to a bank. The FSCS covers a range of products when a UK-authorised firm fails, including deposits, insurance, investments, pensions and mortgage advice, but each has its own rules and limits¹. This page deals with deposits; the guides to FSCS compensation limits and what the FSCS does not cover cover the rest.

How compensation is paid: usually within seven working days

When a bank, building society or credit union fails, the FSCS returns depositors' money within seven working days in most cases, and no claim is needed². The Bank of England, which supervises the scheme, states these payments are typically made within seven days of the firm failing, although complex claims may take longer³. Independent guidance from Which? reports that deposit failures are most commonly paid in two or three days¹².

The trigger for the scheme is the failure itself. The FSCS is triggered when a firm authorised to accept deposits goes out of business, for example into administration or liquidation, and is unable to repay its depositors¹³. From that point the process runs without you:

Cases that take longer are the ones that need individual assessment, such as temporary high balance claims, where the FSCS has to establish that a large sum qualifies for extended protection⁷. If a payout is late, or you disagree with how the FSCS has treated your claim, you can complain to the Financial Ombudsman Service, which can look at FSCS decisions; the guide to challenging an FSCS decision explains how.

What counts as a protected deposit

A deposit is money held in accounts such as current accounts and savings accounts, including cash ISAs and savings bonds³. The provider must be authorised by the PRA to accept deposits⁴. In practice, that means the ordinary accounts most people hold with a UK bank, building society or credit union, including:

• current accounts
• savings accounts
• cash ISAs
• savings bonds³

Credit unions are covered on the same basis: the FSCS protects up to £120,000 per person in total across all accounts you hold with a failed credit union¹⁴.

One point about ISAs matters if compensation is ever paid. Money withdrawn from a cash ISA loses its tax-free status unless it is transferred directly between ISA managers¹⁵. For child trust funds and junior ISAs, the FSCS states that compensation has to be paid into another ISA rather than being cashed¹⁴. So the tax wrapper is preserved in the payment, but only if the money is handled as an ISA transfer rather than a withdrawal.

Money that FSCS deposit protection does not cover

The boundary of deposit protection is drawn by authorisation, and the main gap is firms that are not deposit takers at all. The FSCS cannot protect you if an e-money firm or payment services firm fails¹⁶. Money held with those firms is safeguarded at a separate bank under e-money rules rather than deposited, so if the firm itself fails you would need to make a claim to its administrator¹⁸.

There is a partial exception. Under an FCA policy statement, the FSCS may look through a payments firm to compensate its customers if the firm's UK safeguarding bank fails, but it does not cover cases where the payments firm itself fails¹⁹. In other words, protection follows the bank that holds the money, not the app you use to reach it.

Savings platforms and aggregators are treated differently again, and more favourably. The FSCS applies the same compensation limits to money deposited through an aggregator as to any other bank account, and if the aggregator placed your money with a regulated bank that then fails, it is likely to be protected². The limit still attaches to the underlying bank, so which banks the platform uses matters.

The wider scope of the FSCS, and the products outside it, are covered in the guide to what the FSCS does not cover.

Joint accounts: up to £240,000

A joint account with two holders is protected up to £240,000, because each eligible holder is covered up to £120,000³. MoneyHelper puts the same point in practical terms: two account holders could deposit £240,000 safely²⁰.

The limit still works per person, per licence, not per account. If you hold an individual account and a joint account within the same banking group, the £120,000 limit applies across all of those accounts, not to each one separately². So a joint account does not create a second pot of protection on top of your own accounts at the same bank; it shares the same limit with them.

Joint accounts carry risks of a different kind when one holder dies or loses capacity. If one holder is made bankrupt, the joint account will be frozen, and the bank may close it and refund half the money to the other person, or remove the bankrupt holder's name²¹. If a joint holder loses mental capacity and there is no power of attorney in place, the account could be frozen or restricted to essential transactions²². These are reasons to think carefully about who you share an account with, not just how much protection it carries; the guide to FSCS cover on joint accounts goes further.

Brands that share a banking licence share one limit

The rule that causes the most surprises: if you have money with multiple banks that are part of the same banking group and share a banking licence, they are treated as one bank, and the £120,000 limit applies across all your accounts with them⁴. If a current account and a savings account share one firm reference number (FRN), they are classed as a single firm and the limit is shared across both⁵.

Real examples make the point. Bank of Scotland, Halifax and Lloyds share a licence and count as a single provider for FSCS limit purposes²³. When Tesco Bank's banking business moved under Barclays, the £120,000 limit became shared between the two brands even though the Tesco Bank name continued¹². The same applies to NatWest and Sainsbury's Bank, whose limit is shared along with Ulster Bank, which is also part of the NatWest Group¹².

The way to check is the FRN. Look up each brand on the FCA Register: if two brands show the same authorisation number, they are one firm for protection purposes and share one limit⁵. The FSCS protection checker does the same job by brand name². The guide to FSCS protection when bank brands share a licence lists the known groups.

Protecting more than £120,000 across different banks

You can protect more than £120,000 by spreading it among deposit takers with different FRNs, as long as each holds no more than £120,000 of your money². Because the limit follows the licence, not the brand, the work is in confirming that the banks really are separate firms.

The FSCS gives a worked example of how £300,000 can be fully protected: £120,000 in one authorised bank, fully protected, with the remainder placed with other banks holding different FRNs, each within the limit². The principle is simple, but it depends entirely on the FRN check described above: two brands that look like rivals may sit under one licence, and then the combined balance, not each brand's balance, is what counts against the limit²⁴.

This is the idea behind the savings ladder approach to holding cash, where money is split across providers, and it only works if each rung of the ladder is a genuinely separate authorised firm²³. The guide to keeping savings above the FSCS limit covered sets out the practical steps.

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

Large sums that arrive in an account after a major life event, such as selling a home or receiving an inheritance, can be protected well above the usual limit. The FSCS protects qualifying temporary high balances up to £1.4 million for six months from when the amount was first deposited⁴. The FSCS announced this extended protection in March 2026, describing it as available for six months when receiving a large sum after major life events⁷.

The £1.4 million figure is the current level, but it was raised from a lower one. A Bank of England consultation paper of March 2025 records the proposed increase in the temporary high balance limit from £1 million to £1.4 million²⁵. The protection is deliberately narrow: it exists because a house sale or an inheritance can put someone temporarily over the £120,000 limit through no planning of their own, and it expires after six months, by which point the money is expected to have been moved or spent down.

Claims that rely on temporary high balance protection are among the complex cases that can take longer than seven working days to pay, because the qualifying life event has to be established⁷.

Business, sole trader and partnership accounts

Businesses can be protected, but how depends on their legal form. If your business is a separate legal entity, such as a limited company or LLP, it can claim up to £120,000 for each account, separately from your personal claim at the same bank⁴. A small business account and a personal account with the same bank therefore get two limits.

Sole traders do not get that separation. A sole trader with a business account and a personal account at the same bank is not entitled to two separate claims: the limit is £120,000 in total across both⁴. Partnerships are treated as a single entity too, so a business partnership is entitled to one claim of £120,000, not one claim per business partner⁴.

The FSCS states that the limit applies to individuals and companies, not accounts, and that in the case of deposits, large companies are also able to claim compensation, although some exclusions may apply⁸. For non-deposit claims, such as general insurance, small companies must have an annual turnover of less than £1 million to be eligible⁵.

Scams that pretend to be the FSCS

When a bank fails, or is rumoured to be in trouble, scammers move quickly. Fraudsters have targeted consumers with fake emails claiming to represent the FSCS and asking them to share personal data²⁶. Scammers can use the name of a legitimate firm and sometimes the FSCS logo to try to get people to part with their money².

The FSCS has also seen a rise in caller ID spoofing, where a scammer uses a fake caller ID to make it look as though the call comes from the FSCS²⁷. The scheme's response has included issuing cease-and-desist letters to scammers who use its logo or fake its protection²⁸.

Two points protect you here. First, the FSCS never needs you to act to receive deposit compensation: it is automatic, so any call or email asking you to do something, pay a fee, or confirm details in order to be compensated is not the FSCS⁶. Second, in most situations the FSCS cannot compensate people for money lost to scams or fraud, with the narrow exception of bad advice from an authorised financial adviser to invest in something that turns out to be a scam²⁷. Prevention is therefore the only real protection, and the guide to scams and fraud covers the warning signs.

Where to get help

The FSCS can be reached on 0800 678 1100, by post at Financial Services Compensation Scheme, PO Box 300, Mitcheldean, GL17 1DY, or through the contact form on its website¹². Its protection checker confirms whether a firm and account type are covered². Before relying on protection, you can also search the FCA Register using a firm's FRN: if the status shows authorised, the FSCS may compensate if the firm fails²⁹.

If something goes wrong with a claim rather than with the bank itself, the Financial Ombudsman Service can review FSCS decisions, and the guides to claiming from the FSCS and the Financial Ombudsman Service set out the routes. For general, free guidance on money questions, MoneyHelper offers independent help, including on choosing and using bank accounts¹⁸.

Two wider points are worth knowing. Ring-fencing rules for large banks are designed so that the costs of dealing with a bank that goes bust will not fall on taxpayers³⁰. And when bank branches close, measures such as the Access to Banking Standard and arrangements to provide some banking services via the Post Office are in place to reduce the impact on customers³¹. Neither changes your FSCS protection, but both shape what banking looks like around a failure.