Savings-only and specialist banks

Not every firm that takes your savings is a bank you would recognise from the high street. Some are small, specialist banks that exist mainly to collect deposits and lend them out in a particular market, such as mortgages or savings bonds. Others are not banks at all: the FSCS names MoneyBox, Raisin and Chip as three popular UK providers that "offer savings but aren't actually banks"¹. These firms either place your money with banks that hold the licence, or operate under different rules altogether.

The protection question is the one most savers arrive with, and the answer is reassuring. Any money you hold with a UK-authorised bank, building society or credit union is protected by the Financial Services Compensation Scheme (FSCS) up to £120,000 per person, per banking licence². That limit rose from £85,000 on 1 December 2025³. It makes no difference whether the provider is a giant with branches in every town or a specialist bank that exists only online: what matters is the licence behind the account, not the size of the firm.

What savings-only and specialist banks offer

Savings-only and specialist banks take deposits and put them to work in a narrow slice of lending. A specialist bank might fund only residential mortgages, buy-to-let loans or savings bonds, rather than running the full spread of current accounts, credit cards and branches that the big banks do. Because they do not carry the cost of a branch network, many compete on the rates they pay savers, and most operate online, by phone or by post.

The accounts themselves are the familiar types, described in our guide to types of savings account: easy access accounts, notice accounts, fixed-rate bonds and regular savers. first direct, for example, lists its range as the 1st Account, Basic Bank Account, Regular Saver, Savings Account, Bonus Savings Account and Fixed Rate Savings Bond⁸. Some accounts come with conditions worth checking in the terms: first direct's Bonus Savings Account can only be held one per customer and only in your sole name⁸.

One practical difference with smaller providers is what happens at maturity on a fixed-rate bond. When the term ends, some specialist banks roll your money into one of their own easy access accounts rather than a like-for-like new bond: a Which? review of one-year fixes found JN Bank, Al Rayan Bank, Charter Savings Bank and Gatehouse Bank all do this⁹. If you want a new fixed rate, you may need to act when the account matures, as covered in what happens when a fixed-rate savings account matures.

Because these banks rarely offer the everyday banking themselves, you normally keep your current account elsewhere and transfer money in and out. That separation is worth understanding before you open an account: check how long withdrawals take to reach your main account, and whether the provider charges for faster payment.

FSCS protection: up to £120,000 per person, per bank

The FSCS is the UK's statutory compensation scheme, and the Bank of England describes its deposit role plainly: it protects "deposits in: current accounts, savings accounts, cash ISAs, savings bonds"⁵. The limit is £120,000 per person or company, per authorised firm¹⁰, and it applies from the first pound: as the FSCS put it when the new limit took effect, it "now protects eligible deposits from the first pound up to £120,000 per person, per authorised firm"¹¹.

Two details of how the limit works catch people out. First, it is per person, not per account: the FSCS protects "up to £120,000 in total across all accounts you hold, either in your name or where you are listed as the beneficiary", and protection is "across all accounts held within the bank/banking group, not per account"¹². Ten accounts with one bank give you one £120,000 limit, not ten. Second, it is per authorised firm, not per brand, which is the subject of the next section.

The provider must be authorised by the Prudential Regulation Authority (PRA), the Bank of England arm that supervises banks². Before 1 December 2025 the limit was £85,000³, so older guides and figures you may remember are out of date. The FSCS publishes a protection checker so you can confirm any provider before you deposit¹³.

Which savings accounts and deposits are covered

Covered deposits are defined broadly. The FSCS states that coverage "includes deposits, current accounts and savings accounts"¹³, and its checker confirms this includes "money in current, saving and fixed-term deposit accounts"¹⁴. A deposit, in the FSCS's words, is "money in accounts such as current and savings accounts, including cash ISAs"¹⁰.

In practice, that means the main savings types are all within scope:

• Easy access and limited access accounts
• Notice accounts
• Fixed-rate bonds and fixed-term deposits
• Cash ISAs, including those held with savings-only banks
• Regular savings accounts
• Current accounts held with the same provider

A cash ISA is protected in the same way as any other deposit, up to £120,000 per person, per firm⁵. The ISA wrapper matters for tax, not for compensation: a cash ISA protects your savings from income tax on the interest, but the FSCS limit that applies to it is the same deposit limit as for an ordinary account¹⁵. If you hold a cash ISA and a savings account with the same bank, both count towards that bank's single £120,000 limit.

Brands that share a banking licence share one limit

This is the rule that most often costs people protection without them realising. If two brands share one firm reference number (FRN) or authorisation, the FSCS classes them as a single firm, and "your limit for compensation is £120,000 in total, shared across 'Bank X' and 'Bank Y'"¹⁰. The FSCS puts the same rule another way: anyone with "accounts under different brands owned by the same firm is still only protected up to £120,000"⁵.

Real examples make it concrete. Bank of Scotland, Halifax and Lloyds share a licence and count as a single provider for the FSCS limit¹⁶. Similarly, while the Tesco Bank brand continues, "the FSCS limit of £120,000 is now shared between the two banks", following the move of Tesco Bank's savings, credit cards and loans under Barclays¹⁷. A saver who thought they had £120,000 protected with Tesco Bank and another £120,000 with Barclays would, in fact, have one shared limit.

The same aggregation applies within one banking group: money held in multiple accounts with multiple banks in the same group that share a licence "are treated as one bank", sharing protection limits across all accounts in that group rather than separate limits for each¹³.

Joint accounts: £240,000 for two holders

Joint accounts get the limit per person, not per account. The FSCS confirms joint accounts are eligible "up to the same limit of £120,000 per eligible person"², so a joint account with two holders is protected up to £240,000⁵. MoneyHelper puts it simply: "two account holders could deposit £240,000 safely"¹⁸.

The £240,000 is not a special joint limit, though: it is two people's £120,000 entitlements sitting in one account. Each holder is treated as holding an equal share, and each person's share counts towards their own £120,000 limit with that banking group. So if one holder also has £120,000 in their sole name at the same bank, their share of the joint account is unprotected, because their entitlement is already used up.

One further rule from the FSCS applies here: if you have an individual account and a joint account within the same banking group, the £120,000 compensation limit applies across all these accounts, not to each separate account¹³. Not every savings account can be held jointly: some providers only make their accounts available to sole applicants¹⁹, which is worth checking if joint holding matters to you. Our page on joint savings accounts covers the practicalities, and FSCS cover on joint savings accounts covers the protection detail.

Business and sole trader savings: how the limit applies

The FSCS limit "applies to individuals and companies, not accounts"²⁰. That single sentence answers most business questions, but the details depend on how the business is set up.

If your business is a separate legal entity, such as a limited company or a limited liability partnership, it is treated as its own eligible person: you could claim up to £120,000 for the business account and up to £120,000 for your personal account with the same bank². A charity set up as a limited company likewise has protection up to £120,000¹³.

A sole trader is different, because the business is not a separate legal person: business savings and personal savings with the same bank count together towards one £120,000 limit. And a business partnership does not get a limit per partner: the FSCS states the partnership "is only entitled to a single claim of £120,000 (not one claim per business partner)"².

Temporary high balances: up to £1.4 million for six months

The £120,000 limit would be a serious problem for anyone who briefly holds a large sum, such as the proceeds of a house sale. To deal with this, the FSCS protects certain "temporary high balances" up to £1.4 million for six months from when the amount was first deposited². The FSCS describes these as "exceptional and short-lived deposits which result from certain" major life events, such as selling a home or receiving an inheritance¹⁰.

Qualifying events include money deposited in preparation for buying a property, the proceeds of sale of a property, and proceeds from releasing equity in a property¹⁰. Which? confirms the same protection for house sale proceeds: "It protects up to £1.4m for six months, compared to the usual FSCS limit of £120,000"²¹. The protection runs for six months from when the amount was first deposited, after which the ordinary £120,000 limit applies again.

There are important exclusions. Property-related protection "applies only to your main residence and excludes buy-to-let properties or holiday homes", and general savings built up towards a property purchase do not qualify²⁰. There is one exception with no ceiling at all: no monetary limit applies to temporary high balances arising from a payment in connection with personal injury or incapacity²².

The limit itself is recent. The FSCS's 2024 annual report described temporary high balance protection as covering deposits up to £1m²³; the figure rose to £1.4 million alongside the December 2025 increase in the main limit. In March 2026 the FSCS published research showing 28% of UK adults have received, or know someone who has received, a lump sum of £120,000 or more, alongside awareness of its £120,000 and £1.4m temporary protection limits¹¹. Evidence of where the money came from matters: acceptable documents include bank, building society or Post Office books or statements, investment and share certificates, a professional property valuation, National Savings Certificates, and annuity or trust fund documents²⁴. Our page on temporary high balance protection covers the detail.

Savings platforms and aggregators

Many savers reach savings-only banks through a platform or app rather than directly. The FSCS is clear that using one does not reduce your protection: "The same compensation limits are applied if you've used an aggregator as for other bank accounts"¹³. What matters is the bank that ultimately holds your money and the licence it holds, not the app you used to get there.

The distinction to understand is between platforms that place money with licensed banks and firms that hold money themselves. The FSCS's guidance on banks that "just exist online" names MoneyBox, Raisin and Chip as providers that offer savings but are not banks¹. With a platform, your deposit sits with the partner bank, and that bank's licence and FSCS limit apply; the platform is a route in, not the deposit taker. Our page on cash savings platforms explains how they work, and savings app or bank account: how protection differs compares the two models.

Because the platform does not change the limit, the shared-licence rule still applies in full. Two accounts opened through a platform with two brands that share a licence still give you one £120,000 limit, exactly as if you had gone to each bank directly¹³. The FSCS checker remains the way to confirm what stands behind each account¹⁴.

Where FSCS protection does not apply

The boundaries of the scheme matter as much as its centre. The FSCS "can only protect money held by UK branches of authorised banks and building societies and credit unions"¹³. Outside that perimeter:

• E-money and payment services firms. The FSCS states plainly: "we can't protect you if an e-money firm or payment services firm fails"⁷. Electronic money is pre-paid money stored electronically, on cards, devices or online systems, for making payments²⁵. When Premier Payment Solutions Ltd entered liquidation, the FCA confirmed the FSCS "only applies to certain types of activity and does not cover payment services"²⁶. Under FCA rules, payments firms must hold funds received in exchange for issued e-money in a separate safeguarding account²⁷, but safeguarding is not the same as FSCS protection.
• Deposits held outside the UK scheme. If you are a UK or EEA-based customer with a UK-authorised bank, building society or credit union, the FSCS still protects your money; but if you are a UK citizen based in the EEA banking with an EEA branch of a UK firm, the FSCS no longer protects your savings, as an EEA scheme has taken over⁶.
• Savings structured as insurance. Some savings products are structured as long-term contracts of insurance issued by regulated mutual insurers; the FSCS may protect these under insurance protection rather than deposit protection⁷.
• Non-regulated arrangements. The FSCS does not protect money paid under an individual voluntary arrangement arranged by insolvency partners, which are not regulated by the FCA²⁰.

If you cannot find a provider on the FSCS checker at all, that is a warning sign in itself: the FSCS maintains a page for firms it cannot find, and using it is a sensible step before depositing⁷. Fake bond scams exploit exactly this confusion, impersonating the names of real banks to persuade people to transfer money to accounts that hold no protection; the FSCS publishes guidance on what to look for²⁸. Our page on savings and fake bond scams covers the warning signs.

If a savings bank fails, payment is automatic

The most common fear about a small or online-only bank is that failure would mean a long fight to get money back. The process is in fact designed to need nothing from you. The FSCS states: "If your bank, building society or credit union has failed you don't need to make a claim. We'll return your money automatically, up to our compensation limit"²⁹. NS&I summarises the same promise from the saver's side: "if your bank goes bust then you'll automatically get your money back"³⁰.

The timescale is set out in the rules: the FSCS will pay compensation within seven working days of a bank, building society or credit union failing², and in most cases aims to pay within seven days²⁰. Which? notes that deposit failures are paid within seven days, and most commonly in two or three days⁶. The Bank of England adds the caveat that "complex claims may take longer"⁵, and temporary high balance claims, which require evidence of the source of the money, are the obvious example.

Money above the limit is not lost in the same way as unprotected money held with an e-money firm, but it is not covered by the FSCS either: it becomes a claim against the failed bank's remaining assets, which may be repaid only in part and over a longer period. Our page on what happens to money above the FSCS limit explains that position, and who is not covered by FSCS deposit protection lists the excluded depositor categories. If a failure has affected you and you are unhappy with how the FSCS or the bank dealt with your case, the Financial Ombudsman Service can look at complaints, and free help is available from MoneyHelper.