Enhanced Protection for UK Savers
In a significant move for financial security, the protection limit for UK bank accounts is set to increase, offering savers greater peace of mind. From December 1, 2025, the Financial Services Compensation Scheme (FSCS) will safeguard deposits up to £120,000 per person, per authorised financial institution. This marks a substantial rise from the previous £85,000 cap that had been in place since 2017.
What the New Rules Mean for You
The change, confirmed by the Prudential Regulation Authority (PRA), means that if your bank, building society, or credit union goes out of business, you are entitled to receive up to £120,000 of your money back. Compensation is typically paid automatically within seven days of a firm's failure.
It is crucial to understand that the limit applies to the total amount you hold across any accounts with banks that share a single banking licence. For instance, if you have accounts with two different brands that are part of the same parent group, your combined funds are protected up to the new £120,000 threshold.
Furthermore, the protection for temporarily high balances will also see a boost, rising from £1 million to £1.4 million. This specific cover is designed for large, one-off events such as receiving funds from a house sale or an insurance payout and lasts for six months from the date the money is deposited.
Boosting Public Confidence in Finance
Senior figures from the UK's financial regulatory bodies have welcomed the increase. Sam Woods, Deputy Governor for Prudential Regulation at the Bank of England and CEO of the PRA, stated that the change will help maintain public confidence in the safety of their money, which in turn supports the strength of the entire financial system.
Martyn Beauchamp, Chief Executive of the FSCS, echoed this sentiment, emphasising that the rise ensures consumers can feel confident their money is safe from the very first penny. The FSCS is funded by a levy on authorised financial firms, not by taxpayers.
Consumer advocacy group Which? also supported the move. Rocio Concha, Which? Director of Policy and Advocacy, called it a "sensible decision" that supports consumer confidence without hampering economic growth. The banking industry, represented by UK Finance's Eric Leenders, confirmed they will work with members to implement the changes and ensure customers are fully informed.
