PRA confirms final rules on deposit compensation limit increase

The Prudential Regulation Authority (PRA) confirmed its final rules on the deposit compensation limit in November 2025, and the Financial Services Compensation Scheme (FSCS) deposit protection rose to £120,000 on 1 December 2025¹. The limit applies per eligible person, per eligible firm, for deposits and savings held with UK-authorised banks, building societies and credit unions¹.

The PRA consulted on a proposed increase to the deposit compensation limit in March 2025 and confirmed its final rules in November 2025¹. The consultation, published on 31 March 2025, proposed increasing the limit from £85,000 to £110,000 with effect from 1 December 2025, and raising the limit for certain temporary high balance (THB) claims from £1 million to £1.4 million³. The FSCS states the confirmed deposit limit is £120,000¹. The PRA's consultation document gives £110,000 as the proposed figure³; the FSCS gives £120,000 as the limit that took effect¹.

Between 1 January 2017 and 30 November 2025, the deposit compensation limit was £85,000¹. The PRA said the limit in the UK was set at £85,000 from January 2017³. 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 PRA said it expects to review the deposit protection limit every five years, in accordance with the requirement of the DGSR³.

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. The PRA proposed increasing the THB limit from £1 million to £1.4 million to account for the change in consumer price inflation since THB protection was introduced in July 2015³. Protection of £1 million was available for a period of 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 incapacity³.

Only the deposits and savings limit is £120,000 per eligible person, per eligible firm; other FSCS protection limits, including for pensions, investments, insurance, mortgages, PPI, debt management and funeral plans, are separate¹. Where money is held 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, so the £120,000 limit applies to the total held across 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, compensation in the event of a firm failure is capped at £120,000 per eligible person, per eligible firm, up from £85,000, which applied between 1 January 2017 and 30 November 2025¹. The limit applies to the total held across accounts with firms in the same banking group that share a banking licence, not to each separate account¹. Temporary high balances of up to £1.4 million are protected for up to six months, for example after selling a home or receiving an inheritance¹. The PRA's consultation noted that in 2018 around 98% of depositors were fully protected by the limit, falling to 97% by 2024, and that a limit of £110,000 would have meant around 99% of depositors were fully protected in 2024³. The PRA also said the current £1 million THB limit covered 97% of property sales³. The FSCS publishes a bank and savings checker to check whether money in multiple accounts is protected¹.

What happens next

The PRA proposed a six-month transitional period until 31 May 2026 for firms to update their disclosure materials, and said firms would be required to update their SCV systems to reflect the new limit by 1 December 2025³. The PRA said it would require firms to update disclosure obligations and deposit compensation information by 31 May 2026³. Any change to the deposit protection limit is subject to the approval of HM Treasury under the DGSR³. The PRA said it expects to review the deposit protection limit every five years³.