How your ISA is protected

If your bank or ISA provider goes bust, the Financial Services Compensation Scheme (FSCS) steps in to get your money back. For a cash ISA held with a UK-authorised bank, building society or credit union, the FSCS protects up to £120,000 per person, per authorised firm¹. In most cases you do not even need to make a claim: the FSCS is triggered when the firm is placed into an insolvency process such as administration or liquidation, and it aims to return deposit money within seven days².

The protection works differently depending on the type of ISA. A cash ISA is a deposit, so it gets the full deposit guarantee. A stocks and shares ISA is an investment, so the FSCS covers the failure of the authorised firm holding your money, but it never covers the value of the investments themselves: if your funds fall in price, that loss is yours³. An Innovative Finance ISA is different again, because the FCA's own rules warn that it does not reduce the risk of the investment or protect you from losses⁴.

Cash ISAs: FSCS protection up to £120,000 per person

A cash ISA is simply a savings account with a tax wrapper, and it is protected the same way as any other eligible deposit. The FSCS protects up to £120,000 per person or company, per authorised firm⁸. That means if your provider fails, the first £120,000 of your cash ISA balance, added together with your other savings at the same licensed firm, is returned to you.

The scheme covers banks, building societies and credit unions that have been authorised by the Prudential Regulation Authority (PRA) to take deposits¹. Your provider must hold that authorisation for the protection to apply: the FSCS only covers financial services firms authorised by the Financial Conduct Authority (FCA) or the PRA to do business in the UK⁹. Most household-name banks and building societies qualify, and the FSCS publishes a protection checker on its website where you can confirm a provider by name¹⁰.

The £120,000 figure is comfortably above what most people can subscribe to an ISA in a year. The overall annual ISA limit is £20,000 per tax year¹¹, so a single year's subscriptions sit well inside the protection limit. The limit matters most for people who have built up an ISA over many years, or who hold other savings with the same banking group: it is the total across everything that counts, not the ISA on its own.

The limit is per banking licence, not per brand or per account

This is the rule that catches people out. The £120,000 limit applies to individuals and companies, not accounts¹³. It is measured per authorised firm, and several familiar brands can share one banking licence because they sit inside the same banking group. Where brands share a licence, the £120,000 compensation limit applies to the total amount you hold across all those accounts, not to each separate account⁵.

So if you hold a cash ISA with one brand, an easy access savings account with a second brand, and a fixed rate bond with a third, and all three brands belong to the same licensed banking group, you have one £120,000 limit between them, not three. Money held with a completely separate bank, licensed in its own right, gets its own £120,000 limit. The FSCS's protection checker shows which providers share a licence¹⁰.

In practice, this means the number of accounts you hold matters far less than who stands behind them. Someone with £60,000 in a cash ISA and £70,000 in an ordinary savings account at the same licensed group has £130,000 with one firm, so £10,000 of it sits above the protection limit. Someone with the same £130,000 split between two separately licensed providers has every pound covered.

Joint ISAs don't exist, but joint savings change your total

ISAs cannot be held in joint names. An ISA is an individual account, opened using your national insurance number, and only one person can subscribe to it¹⁴. There is no such thing as a joint cash ISA or a joint stocks and shares ISA, so the question of how protection is split within an ISA never arises.

Joint savings accounts are different. Joint accounts are eligible for FSCS protection up to the same limit of £120,000 per eligible person¹⁵. The FSCS protects each joint account holder, whatever the number of holders, up to £120,000 in total across all accounts held with that firm⁶. In a two-person household, that means a joint savings account is treated as half each for protection purposes, and each partner's share counts towards their own £120,000 with that licensed firm.

This matters for couples planning where to hold ISA money. Because each person has their own ISA allowance and their own £120,000 limit per authorised firm, a couple can shelter substantially more than a single person by using accounts in individual names at separately licensed providers. The page on whether an ISA can be held in joint names covers the account rules in full.

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

The £120,000 limit has one important exception. The FSCS also protects certain qualifying temporary high balances up to £1.4 million for six months from when the amount was first deposited¹. These are exceptional, short-lived deposits that result from major life events, such as the proceeds from the sale of a house¹⁶.

The protection is deliberately narrow. It exists because a house sale, an inheritance or a compensation payment can briefly put a sum far above £120,000 into a single account, through no fault of the saver. The Bank of England, which explains the scheme, describes the temporary protection as up to £1.4 million in most cases, applying for up to six months above the £120,000 limit for certain types of deposits². After six months, the ordinary limit applies again, so money still sitting above £120,000 loses its extra cover.

If you are moving house and your cash ISA and savings together briefly exceed the limit, the timing matters: the six months run from when the amount was first deposited, not from when you first notice it. MoneyHelper, which lists the rule among savings protections, gives the example of money from the sale of a house as a qualifying balance¹⁶. If you expect a large sum to sit in one place for longer than six months, spreading it across separately licensed firms is the only way to keep full cover, since the limit is per authorised firm.

Stocks and shares ISAs: protection if the provider fails, not if investments fall

A stocks and shares ISA works on a completely different principle from a cash ISA, and so does its protection. The FSCS covers investment business, but what it protects is the failure of the authorised firm, not the performance of your investments. The FCA's rulebook requires firms to spell this out: the risk summary given to investors holding peer-to-peer agreements states plainly:

That wording, from the FCA handbook, applies to Innovative Finance ISAs, but the principle is the same for stocks and shares ISAs: the tax wrapper is not insurance⁴. If the funds or shares inside your ISA halve in value, no compensation is due, because nothing has failed. The FSCS's investment protection guide sets out the questions to ask before investing, including whether the product is covered by FSCS, how much of your money is protected, and what would happen to the money if the provider's business fails³.

Where the FSCS does step in is when an authorised investment firm goes out of business and money or assets are missing. The FSCS covers firms carrying out regulated activities, and it directs investors to check that the provider is authorised by the FCA or PRA before investing³. Its guide to investment protection also covers financial advice: if an adviser who gave you bad advice fails, compensation may be available, and the guide lists the questions to ask an adviser about what happens if the firm fails¹⁷.

For most people holding mainstream funds with a large platform, the practical risk is market movement, not provider failure. The FSCS protection is the backstop for the rarer event. The pages on stocks and shares ISAs and Innovative Finance ISAs explain how each wrapper works.

What happens to your ISA if your bank or provider fails

When a bank, building society or credit union fails, the process is designed to run without the customer doing the work. The FSCS is typically triggered when the firm is placed into an insolvency process, such as administration or liquidation². In most circumstances customers will not need to make a claim: the FSCS works with the failed firm, the FCA and the insolvency practitioner to identify depositors and pay them¹⁸.

For deposits, the FSCS aims to pay compensation within seven days of a bank, building society or credit union failing, although complex claims may take longer². NS&I, which runs its own savings products, puts the consumer position simply: if your bank goes bust, you will automatically get your money back¹⁹. The FSCS's own guidance agrees that for eligible deposits the process is automatic²⁰.

The same automatic approach applies to credit unions, which some people hold savings with, including junior savings: the FSCS can pay back money held with a failed credit union up to £120,000 per person, and in most cases returns the money within seven working days from the date the credit union failed²¹. If a firm cannot be found in the FSCS checker, its "can't find the firm" guidance explains what to do next²².

Compensation goes back into an ISA, keeping its tax-free status

An ISA's value is not only the money in it but its tax treatment. Any returns you earn inside an ISA are free from UK Income Tax and Capital Gains Tax²³, and that treatment continues while the money stays in ISAs²⁴. HMRC guidance confirms the same from the tax side: income you earn from an ISA is not taxable²⁵. So when a provider fails, what happens to the tax-free wrapper matters.

For adult cash ISAs, the FSCS returns the protected balance, and the money keeps its ISA status. For children's accounts the rule is explicit: if the money is held in a Child Trust Fund or junior ISA account, the compensation will have to be paid into another ISA rather than being cashed²¹. That preserves the tax-free growth for the child rather than turning it into a taxable lump sum.

This is also why the FSCS's compensation route matters for people who have built up large ISA balances over decades. Someone who has subscribed the full allowance every year since the limit rose to £20,000 could hold a sum well above £120,000, and the excess above the protection limit is at risk if the provider fails. The wrapper survives, but only the protected amount comes back. The pages on how an ISA works and ISAs and tax cover the wrapper rules.

Junior ISAs are covered in the same way as adult accounts where the provider is authorised. Providers state their own position: Moneybox, for example, says its Junior ISA is protected by the Financial Services Compensation Scheme²⁶. The protection limit and the process are set by the FSCS, not by the brand.

Where FSCS protection does not apply

The FSCS is not a blanket guarantee over everything a financial firm does. Its protection applies only where the authorised firm's activity is regulated by the PRA or the FCA³. That single rule excludes several situations consumers sometimes assume are covered:

• E-money and payment services firms. The FSCS cannot protect you if an e-money firm or payment services firm fails²². The FCA made the point concretely when Premier Payment Solutions entered liquidation in September 2026, stating that the FSCS only applies to certain types of activity and does not cover payment services²⁷. An FCA Consumer Panel report likewise notes that PayPal has no FSCS protection²⁸.
• Investment losses. As above, a fall in the value of anything held in a stocks and shares or Innovative Finance ISA is not compensable⁴.
• Unauthorised firms. Protection depends on the provider being authorised by the FCA or PRA. A firm that is not on the register is outside the scheme altogether⁹.
• Certain insurance lines. The FSCS lists insurance claims that are not eligible, including goods in transit, marine, aviation and credit insurance²⁹.
• Some debt solutions. The FSCS does not protect money a debtor pays under an individual voluntary arrangement arranged by insolvency practitioners, which are not regulated by the FCA, or under debt advice¹³.

There is also a residency edge case. The FSCS still protects UK or EEA-based customers of a UK-authorised bank, building society or credit union, but it no longer protects UK citizens based in the EEA who bank with an EEA branch of a UK firm, where the local EEA scheme has taken over³⁰. Anyone living abroad with UK savings should check which scheme now covers them.

FSCS scams: how to spot a fake compensation offer

The FSCS's name is trusted, and scammers exploit that. The FSCS warns that scammers can use the name of a legitimate firm and sometimes the FSCS logo to try to get you to part with your money¹⁰. Because real FSCS payouts are free and usually automatic, any approach asking you to pay, or to "release" compensation, is fraudulent by definition.

The FSCS has also seen a rise in caller-ID spoofing. Its own guidance explains:

The warning continues that the FSCS has seen a rise in this sort of scam³¹. The practical defence is simple: if a call, text or email about compensation seems odd, do not engage with it. Contact the FSCS yourself using its published number, 0800 678 1100¹³, and never use contact details supplied by the person who approached you.

The FSCS states it is free to customers and will never ask you to send it money³². It is funded by a levy on the authorised firms whose customers it protects², so there is no circumstance in which a genuine claim needs an upfront fee. Anyone offering to claim on your behalf for a cut should also be treated with care: the FSCS says customers keep 100% of any compensation owed when claiming directly through it¹⁸. The wider guide to scams and fraud covers the warning signs.

Getting help and contacting the FSCS

The FSCS is the first port of call for anything about deposit or investment protection. You can call it free on 0800 678 1100, write to Financial Services Compensation Scheme, PO Box 300, Mitcheldean, GL17 1DY, or use the online contact form at fscs.org.uk³⁰. Its website carries the protection checker, where you can look up a provider and see whether it is covered and how its licence is shared¹⁰.

Two other bodies matter alongside it. MoneyHelper, the free government-backed money guidance service, explains savings protection in plain terms and is worth reading before making decisions¹⁶. The Financial Ombudsman Service handles complaints about firms that are still trading: if your complaint is about a firm that has failed, the FSCS handles it instead, and the FSCS explains how it works with the ombudsman on its claims pages³³. Complaints data shows ISA providers are not immune to disputes: in the first quarter of 2026/27, 40% of complaints about cash ISAs, including cash Lifetime ISAs and Help to Buy ISAs, were upheld³⁴.

If your question is about an ISA transfer that went wrong, a provider's service, or a complaint rather than a failure, the page on complaining about an ISA provider sets out the route. If it is about whether your money is safe where it is, start with the FSCS checker, then the FCA register¹⁷. Both are free, and neither will ever ask you for money.