PRA consults on raising FSCS deposit protection limit to £110,000

The Prudential Regulation Authority (PRA) published a consultation on 31 March 2025 proposing to increase the deposit protection limit from £85,000 to £110,000, with effect from 1 December 2025 for firm failures occurring on or after that date¹. The limit has stood at £85,000 since January 2017¹. The PRA also proposes to raise the limit for certain temporary high balance (THB) claims from £1 million to £1.4 million, also applying from 1 December 2025¹.

The proposed increase reflects consumer price inflation since the limit was last changed. The PRA says £85,000 in January 2017 had increased to £113,669 in December 2024 in real terms¹. It estimates that around 98% of depositors were fully protected by the limit in 2018, falling to 97% by 2024, and that a limit of £110,000 would have fully protected around 99% of depositors in 2024¹. On temporary high balances, the PRA says the current £1 million limit covered 97% of property sales¹.

Temporary high balance protection applies to balances that are temporarily high because of specific life events, such as a residential property transaction. Protection of £1 million is available for six months from the point of deposit for certain qualifying life events, and no monetary limit applies for THBs arising from a payment in connection with personal injury or incapacity¹. THB protection was introduced in July 2015¹.

The PRA proposes a six-month transitional period until 31 May 2026 for firms to update disclosure materials, and would require firms to update disclosure obligations and deposit compensation information by that date¹. Firms would be required to update their single customer view systems to reflect the new limit by 1 December 2025¹. The PRA expects to review the deposit protection limit every five years, in accordance with the Deposit Guarantee Scheme Regulations¹. Any change to the limit is subject to the approval of HM Treasury¹.

The FSCS states that on 1 December 2025 the deposit protection limit rose to £120,000, and that the PRA confirmed its final rules in November 2025². This differs from the £110,000 figure proposed in the March 2025 consultation¹. The FSCS also states that temporary high balances of up to £1.4 million are covered, protected for up to six months². The FSCS says the £120,000 limit applies per eligible person, per eligible firm, and that where accounts share a banking licence the limit applies to the total held across them, not to each separate account².

Why it matters for households

The limit sets the maximum the Financial Services Compensation Scheme (FSCS) pays per eligible person, per eligible firm if a bank, building society or credit union fails. Under the consultation proposal, from 1 December 2025 the protected amount would rise to £110,000¹; the FSCS states the figure that took effect was £120,000². Either way, the change applies to firm failures occurring on or after 1 December 2025, not to earlier failures¹.

Households holding more than the limit with a single firm are affected most, because the limit applies to the total held across accounts with firms that share a banking licence, not to each account separately². The higher temporary high balance limit matters for people holding large sums briefly after events such as selling a home or receiving an inheritance, which are protected for up to six months¹. The FSCS compensation limits for other products, such as investments, insurance and pensions, are unchanged by this proposal². Some depositors are not covered by FSCS deposit protection at all.

What happens next

The consultation on the deposit protection limit closed on 30 June 2025, while responses on the Bank Resolution (Recapitalisation) Bill proposals were requested by 30 April 2025¹. The PRA said it expected to confirm the final rules in November 2025, including the final implementation dates¹. The FSCS states the PRA confirmed its final rules in November 2025 and the new limit took effect on 1 December 2025². Firms have until 31 May 2026 to update disclosure materials under the proposed transitional period¹.