The Financial Services Compensation Scheme (FSCS) protects the cash savings that you hold in any covered bank or building society account. The compensation limit for FSCS deposit protection is £120,000. Joint accounts are eligible up to the same limit of £120,000 per person.
The limit for temporarily high balances is £1.4m. (See below for more on this).
These limits were raised on 1 December 2025.
This increase in protection is good news for savers. We’ve just gone through a period of higher inflation and higher interest rates, so it is entirely appropriate for the deposit protection to be raised in turn, too.
And whereas other personal finance thresholds remain frozen (see income tax brackets) or have even fallen (dishonourable mention: the tax-free dividend allowance) the FSCS compensation scheme limit has gone up meaningfully.
Hurrah!
What is the FSCS?
The FSCS is a statutory compensation scheme for customers of firms authorised by the FCA (Financial Conduct Authority) and PRA (Prudential Regulation Authority).
The FSCS is funded by levies raised from such firms.
The deposit protection the FSCS offers is one of the significant benefits of cash for private investors. Everyone with savings should understand the details.
If an authorised bank or building society fails, then the FSCS will generally pay your money back to you within seven days, up to the compensation limit.
Protection applies per person per banking licence, regardless of how many accounts you hold.
- The key identifier to know is the bank or building society’s FRN 1. Every authorised institution has its own FRN and banking licence.
The FSCS protects cash deposits held with the vast majority of mainstream current and savings accounts at banks and building societies authorised by the PRA or FCA. (Electronic money institutions and payment apps – think Revolut or Wise – are not covered by the FSCS. Those regulated by the FCA should have other consumer safeguards in place. But they do not benefit from FSCS protection like a regulated bank.)
Make sure your bank is covered by the FSCS – don’t just assume it.
- The PRA (via the Bank of England) provides an updated list of the firms it regulates.
- You can also check whether your bank account is protected via an FSCS tool.
Note that overseas branches of UK banks are not usually covered by the FSCS scheme. There you’d be relying on local schemes, so check out that region’s regulations as needed.
Non-cash investments are treated differently under UK regulations. See our article on investor compensation for more on that.
What happens if I have more than £120,000 in a failed UK bank?
If you hold cash deposits with a financial institution in excess of the deposit insurance limit, then you’d become a general creditor of that institution if it failed.
For instance, if you have £200,000 in deposits in a sole account with a failed authorised bank, then the last £80,000 is not guaranteed. You wouldn’t be able to recover it via the FSCS.
It’s important to note the FSCS guarantees are on a per institution / banking licence basis. See below.
What counts as one institution for FSCS purposes? The FSCS compensation limit doesn’t apply per account or even per brand, let alone to multiple accounts at the same bank. It applies per banking licence. This is important because banks you may not realise are connected might well be owned and operated under the same licence. For instance, First Direct is a division of and shares a licence with HSBC. Conversely, other banks that have the same owner might operate under distinct licences. For example, NatWest and RBS share ownership but operate under separate licences.
How can I see which banks share a licence?
It’s not the easiest thing to determine! Banks and other savings institutions have been merged and dissolved over many years, obscuring who owns who and what licence they operate under. And the banks don’t exactly strive to highlight this information.
A good resource to check for shared licences is the excellent list Who Owns Whom? from Moneyfacts. The deposit-taking licence a bank or building society operates under is clearly shown in the rightmost columns.
You can also consult this list of banking brands. It’s a PDF maintained by the Bank of England, and appears to be kept up-to-date.
You can use that aforementioned FSCS tool to check whether your specific cash amounts held across multiple institutions are protected. It will tell you where you’re not covered.
MoneySavingExpert also has a tool to check which banks are linked.
Confused by the results you’re seeing? Check the FRN!
It’s easy to make a slip when using these tools.
For instance, here’s some output from the FSCS tool telling me £200,000 with – apparently – First Direct and HSBC Bank is safe:
What gives? As I stated above I know First Direct and HSBC share a banking licence. So the tool shouldn’t show £200,000 held across the two as protected.
Well, study the names on the left for a clue to the mystery. You’ll see their FRNs are different.
The HSBC Bank with the FRN 114216 is not the ring-fenced entity HSBC UK Bank Plc where UK savers stash their cash – and which has the same FRN 765112 as First Direct.
Below is the correct output, showing £80,000 – that is, the amount in excess of the £120,000 FSCS deposit protection – is at risk if I have £100,000 in each of these two entities:
It’s pretty confusing – and as an aside no wonder fraudsters have apparently singled out this ‘other’ authorised HSBC entity as part of ‘clone’ scams, as documented by the FCA in this PDF.
Indeed I can’t actually find HSBC’s UK FRN on its website. Which is sub-optimal, to say the least. Far better if all banks and building societies were required to include their FRN in the same place in the footers of their website, say.
It’s not the point of this article to belabour the fact that the situation is a confusing mess. (MSE has done a good job of that.)
However I’d urge you again to triple-check everything, because it is a bit of one.
Spread your cash between separate institutions to maximise protection
As we’ve said, the FSCS will compensate you for up to £120,000 on cash deposits held with any ‘authorised institution’ in the event of its failure.
(Joint accounts are eligible for FSCS up to the same limit per eligible person. But I’m going to ignore joint accounts hereon for simplicity. Do the maths for homework!)
The total protection is calculated by adding up all the money you’ve spread across any of that institution’s subsidiary banking brands registered under the same banking licence.
Again, HSBC UK Bank and First Direct are registered under the same banking licence.
Let’s say:
- You have £100,000 on deposit with HSBC
- You have another £100,000 deposited with First Direct
In the event of failure you’d only be automatically compensated by the FSCS for £120,000 of the total £200,000 you’d placed with them.
In contrast £200,000 split across two firms with different banking licences would be covered in full.
Once you have more than £120,000 in cash savings you should therefore open a new bank account with a bank that operates under an entirely distinct banking licence. By doing so, you can continue to ensure all your savings are eligible for compensation in the event of a failure.
Remember to consult a credible list to ensure your money is appropriately diversified across different banking licences.
Temporarily high limits
The FSCS provides a special £1.4 million protection limit for temporarily high bank balances held with a bank, building society, or credit union if it fails.
This special limit offers people with some types of temporary high balances protection for six months.
If you’d just sold a house, for instance, you might have a temporarily high balance. The special protection means you don’t have to open numerous different bank accounts just to protect your short-term cash pile.
Other scenarios where this limit might apply include inheritances or divorce settlements.
Previous changes in deposit protection
The deposit guarantee limit was changed to £120,000 in December 2025. Before then it was £85,000.
Before that, the limit periodically changed to mirror the EU’s €100,000 standard. As you might imagine, given how currency rates fluctuate this led to some confusion amongst savers and even pundits.
Happily, post-Brexit that mechanism no longer governs the UK limit.
(Have we finally found a Brexit benefit?!)
At the last count, roughly 95% of people were covered by the previous compensation limit anyway.
Hard though folks like us may find it to believe, the majority of British people have less than £120,000 in savings. (A woeful five million have no savings at all.)
Beyond cash
The FSCS deposit protection only covers cash savings. Notably it does not cover money market funds.
Rather, such funds are protected by FSCS investor compensation rules, provided the funds are from firms authorised by the FCA or PRA. At the time of writing the limit for such protection is still just £85,000.
Remember that other lower-risk assets, specifically UK government bonds, have a different risk profile to cash. They won’t be in any immediate danger should a commercial bank go bust.
I say ‘immediate danger’ because in a scenario where UK banks are going under left and right, investors may question the viability of the UK state. Government bonds could then plummet in price. Given we can print our own currency to meet our obligations though, it seems more likely to me they’d rise in value in such a crisis, at least in pound sterling terms.
Former fund manager and Monevator contributor Lars Kroijer has written about the safety of your cash in the bank. Lars believes you should assess the credibility of individual banks, even with the FSCS protections. Read his piece for more.
Bottom line: If you’re lucky enough to have a lot of cash, pay attention.
I have a dream: one very high guarantee limit, never changing
I believe the FSCS deposit protection limit should be much higher. Perhaps a million pounds.
After all, it’s there to give us confidence in the banking system. Not to generate business for banks by forcing people with a lot of cash to run a side hustle managing half a dozen or more bank accounts to ensure they remain protected.
True, for most savers there will be no practical difference between £120,000 and £1 million protection for cash. Both numbers are fantasy figures for the average UK saver.
Yet even though most savers would never hit either limit, frequent changes do muddy the waters and undermine confidence.
Ideally anyone in the street could tell you what the compensation limit is. It wouldn’t change often. Perhaps once a generation?
But at the time of writing I’m confident most people either couldn’t tell you what the limit is or they’d think it’s still £85,000.
It’s a bit silly. From the UK state’s point of view, FSCS deposit protection is akin to the deterrent effect of nuclear weapons. It’s there but you don’t ever want to use it in size.
If the FSCS ever had to start bailing out big UK High Street banks, we’d be in serious trouble. So the state would probably step in anyway. (In the last financial crisis the UK government even covered private savers with overseas failed banks that weren’t protected. Next time it could be more or less generous).
Ample compensation
What the FSCS is really there to do is stop bank runs, like we saw with Northern Rock in 2007. The fact that it’s there should mean we never need to use it, because savers know their money is protected.
Given a deposit guarantee scheme is not something that should be called upon in the normal run of things, why not make it big enough to cover nearly everyone in almost all eventualities?
I guess there does have to be some limit to the protection. Without it, oligarchs might move billions to UK banks for their rock-solid protection. That would represent a huge liability to the state.
A £1m threshold would make the specific limit irrelevant for virtually everybody – even the vast majority of those with multiple accounts under the same banking licence. But it would also be enough to prevent money-shuffling shenanigans by the safety-seeking ultra-wealthy.
£1 million is easy to remember, too!
For now though it’s £120,000 per authorised institution. To be totally safe you should diversify any cash savings beyond that amount between institutions operating under different licences.
It’s always prudent to assume failure is possible. Even if it’s very unlikely.
Note: This post has been updated, and some older comments below may refer to the previous FSCS compensation limit. I’ve kept the old comments for historical interest and context, but please do check the date of the comments if you’re confused.
- Firm Reference Number, but nearly always called an FRN in the literature.[↩]
