FSCS deposit protection limit rises to £120,000

The Financial Services Compensation Scheme deposit protection limit rose from £85,000 to £120,000 on 1 December 2025, following confirmation of final rules by the Prudential Regulation Authority in November 2025¹. The limit applies per eligible person, per authorised firm, and covers deposits held with UK-authorised banks, building societies and credit unions¹. The previous limit of £85,000 had applied since 1 January 2017¹.

The PRA consulted on a proposed increase in March 2025 and confirmed its final rules in November 2025². The FSCS said the increase reflects the latest inflation data¹. The limit applies to firms that fail from 1 December 2025; for firms that failed before that date, the previous limit of £85,000 still applies³.

Alongside the deposit limit, the limit for qualifying temporary high balances rose to £1.4m¹. Temporary high balances are protected for up to six months and can arise from events such as selling a home or receiving an inheritance². There is no limit for temporary high balances linked to personal injury or incapacity³. The FSCS also began rolling out a refreshed "FSCS Protected" badge from November 2025¹.

The limit applies across accounts held under different brands owned by the same firm. The FSCS states that where banks share a banking licence, the £120,000 limit applies to the total held across all those accounts, not to each separate account⁷. The Bank of England gives HSBC, which operates under brands including First Direct, as an example³. For joint accounts, each holder is protected up to £120,000, so a joint account with two holders would be protected up to £240,000³.

Sources: FSCS¹; Bank of England³.

The FSCS does not protect money held with e-money institutions and payment providers, which are regulated by the Financial Conduct Authority but do not benefit from the scheme's compensation service⁵. The FSCS also lists categories of depositors who are not covered by deposit protection¹.

Why it matters for households

The change affects anyone holding deposits with a UK-authorised bank, building society or credit union, and applies to firms that fail from 1 December 2025³. The amount protected per person, per authorised firm rises by £35,000, and the temporary high balance limit rises by £400,000¹. Because the limit applies per banking licence rather than per account or brand, savers with money spread across brands sharing a licence remain protected up to £120,000 in total across those accounts⁷. The FSCS paid compensation of about £10 million in relation to deposit claims over the three financial years from 2021 to 2024, during which it declared 11 credit unions and one small bank in default³. Payments are typically made within seven days of a firm failing, although complex claims may take longer³.

What happens next

The FSCS said it will work with the PRA and industry partners to raise awareness of the new limit and the "FSCS Protected" badge, supporting firms during the transition from 1 December until 31 May¹.