The Financial Services Compensation Scheme (FSCS) has announced an increase to the deposit protection limit, which will rise from £85,000 to £120,000 with effect from 1 December 2025. The change is intended to strengthen consumer protection and provide greater reassurance for savers holding funds with UK-authorised financial institutions.
What Is FSCS Deposit Protection?
The FSCS is the UK’s statutory compensation scheme for customers of authorised financial services firms. If a UK-authorised bank, building society or credit union fails, the FSCS can compensate eligible depositors up to the applicable protection limit.
From 1 December 2025, the maximum compensation for deposits will increase to £120,000 per person, per authorised institution.
How the Protection Limit Works
The FSCS limit applies to the total amount you hold with one banking group, not to each individual account. This means that:
if you hold multiple accounts with the same bank, the balances are added together; and
banks operating under the same banking licence are treated as a single provider.
For joint accounts, each account holder is protected separately. As a result, joint account holders may be protected for up to £240,000 in total.
Increased Protection for Temporary High Balances
The FSCS has also confirmed that the limit for temporary high balances will increase from £1 million to £1.4 million.
Temporary high balance protection may apply where a large sum is held in an account as a result of a qualifying life event, such as:
buying or selling a property;
receiving an inheritance; or
receiving certain retirement or insurance payments.
This enhanced protection applies for a period of six months from the date the funds are credited to the account.
What This Means for Savers
The increase provides additional protection for individuals with higher savings balances and those temporarily holding significant sums. However, savers should continue to review how their funds are distributed across financial institutions to ensure they remain fully protected.
Q&A: FSCS Deposit Protection Explained
What is the FSCS?
The Financial Services Compensation Scheme is the UK’s compensation scheme of last resort for customers of authorised financial services firms.
When does the new £120,000 limit apply?
The increased deposit protection limit applies from 1 December 2025.
Does the limit apply per account or per bank?
It applies per person, per authorised institution, regardless of how many accounts you hold with that institution.
Are joint accounts protected?
Yes. Each named account holder is protected up to the deposit protection limit.
What is a temporary high balance?
A temporary high balance is a large sum held in an account following a qualifying life event, which benefits from increased FSCS protection for six months.
Contact Us
Financial protection rules can be complex, particularly where significant sums or multiple accounts are involved. Our Financial Services and Private Client solicitors advise individuals and businesses on safeguarding funds, structuring accounts and understanding regulatory protections.
If you would like advice on how the FSCS changes may affect you or your business, contact Willett & Co Solicitors today for expert guidance.