PRA consults on proposed increase to deposit compensation limit

The Prudential Regulation Authority (PRA) consulted on a proposed increase to the deposit compensation limit in March 2025 and confirmed its final rules in November 2025, according to the Financial Services Compensation Scheme (FSCS)¹. On 1 December 2025 the FSCS deposit protection rose to £120,000¹.

Between 1 January 2017 and 30 November 2025, the deposit compensation limit was £85,000¹. Under the Deposit Guarantee Scheme Regulations 2015, the PRA is required to review the FSCS deposit compensation limit periodically and at least every five years¹.

The FSCS states that if a UK-authorised bank, building society or credit union goes out of business, it can compensate depositors up to £120,000 per eligible person, per authorised firm¹.

The £120,000 limit applies to deposits and savings only. The FSCS lists separate protection limits for pensions, investments, insurance, mortgages, PPI, debt management and funeral plans¹. The FSCS also covers temporary high balances of up to £1.4 million, which are protected for up to six months and may arise from major life events such as selling a home or receiving an inheritance¹.

Source: FSCS¹

Where a saver holds money in multiple accounts with multiple banks that are part of the same banking group and share a banking licence, the FSCS treats them as one bank. In the event of a firm failure, the £120,000 compensation limit applies to the total amount held across all those accounts, not to each separate account¹.

Why it matters for households

The change affects anyone holding deposits or savings with a UK-authorised bank, building society or credit union. From 1 December 2025, the amount the FSCS can compensate per eligible person, per authorised firm rose from £85,000 to £120,000, an increase of £35,000¹.

Because the limit applies per eligible firm rather than per account, savers with accounts across brands that share a banking licence are covered once against the combined balance, not separately for each brand¹. The higher limit applies to deposits and savings only, so balances held in pensions, investments, insurance and other products are covered under their own separate limits¹.

Temporary high balances, which the FSCS says can follow events such as a home sale or an inheritance, remain covered up to £1.4 million for up to six months¹.

What happens next

The PRA confirmed its final rules in November 2025 and the new limit took effect on 1 December 2025¹. The FSCS says the PRA is required to review the deposit compensation limit periodically and at least every five years under the Deposit Guarantee Scheme Regulations 2015¹. No further review date has been reported.