PRA consults on raising FSCS deposit protection limit from £85,000 to £110,000 and THB limit from £1 million to £1.4 million

The Prudential Regulation Authority (PRA) published consultation paper CP4/25 on 31 March 2025, proposing to raise the FSCS compensation limits for savings from £85,000 to £110,000 per depositor per firm, and the limit for certain temporary high balance (THB) claims from £1 million to £1.4 million¹. Both increases would take effect from 1 December 2025, for firm failures occurring on or after that date¹.

The deposit limit has stood at £85,000 since January 2017¹. The PRA said the proposed increase reflects consumer price inflation since then, noting that £85,000 in January 2017 had increased to £113,669 in December 2024 in real terms¹. THB protection was introduced in July 2015, and the PRA said the proposed £1.4 million limit accounts for inflation since then¹. Under existing rules, £1 million of protection is available for six months from the point of deposit for certain qualifying life events, and no monetary limit applies to THBs arising from a payment connected with personal injury or incapacity¹.

The PRA set out the coverage effect of the change. In 2018, around 98% of depositors were fully protected by the limit; by 2024 this had fallen to 97%¹. A limit of £110,000 would mean around 99% of depositors would have been fully protected in 2024, the PRA said¹. It added that the current £1 million THB limit covered 97% of property sales¹.

The consultation also covers disclosure. The PRA proposes a six-month transitional period until 31 May 2026 for firms to update disclosure materials, and proposes that depositor information be displayed in third-party premises such as banking hubs¹. Firms would be required to update their single customer view systems to reflect the new limit by 1 December 2025¹.

Source: PRA CP4/25¹

A separate set of proposals in the paper concerns the Bank Resolution (Recapitalisation) Bill, which would enable industry funds provided via the FSCS to be used to recapitalise a failing firm to support its sale or transfer to a bridge bank¹. The PRA said HM Treasury consulted on these proposals in January 2024, and that the work followed the failure of Silicon Valley Bank UK Limited in March 2023¹.

Why it matters for households

The deposit limit determines how much of a saver's money is protected if a PRA-authorised bank, building society or credit union fails. At £85,000, a saver with more than that at a single firm has exposure above the protected amount; the proposed £110,000 limit would raise the protected ceiling by £25,000 per person per firm from 1 December 2025¹. The PRA's own figures indicate the change would lift full protection from around 97% of depositors in 2024 to around 99%¹. Money held above the limit is not covered, and the rules on who is not covered by FSCS deposit protection and on what happens to money above the FSCS limit are unchanged by the proposals.

For people receiving a large one-off sum, such as from a house sale, the THB limit would rise to £1.4 million for six months from the point of deposit, for qualifying life events¹. The PRA said the current £1 million limit covered 97% of property sales¹.

The changes would apply to firm failures on or after 1 December 2025, so balances held at a firm that failed before that date would be assessed under the existing £85,000 limit¹. Firms have until 31 May 2026 to update their disclosure materials, meaning the information savers see in branches and on websites may lag the new limits for a period¹.

What happens next

Responses to the FSCS limit proposals are requested by 30 June 2025, while responses on the Bank Resolution (Recapitalisation) Bill proposals are requested by 30 April 2025¹. The PRA said it expects to confirm the final rules in November 2025, in light of consultation feedback, including the final implementation dates¹. Any change to the deposit protection limit requires the approval of HM Treasury under the Deposit Guarantee Scheme Regulations, and the PRA said it would seek that approval before final rules were made¹. The PRA said it expects to review the deposit protection limit every five years¹.