The UK’s Financial Services Compensation Scheme, or FSCS, deposit protection limit for bank customers will increase to £120,000 per eligible depositor per authorized institution starting December 1, 2025.
This change, confirmed by the Prudential Regulation Authority on November 18, 2025, raises the current limit from £85,000, which has been in place since 2017. The adjustment aims to account for inflation and maintain public trust in the banking system.
PRA Announcement Boosts Bank Savings Protection
The Prudential Regulation Authority, part of the Bank of England, announced the increase after a consultation process that began in March 2025. Initially, the proposal was for a rise to £110,000, but feedback and updated inflation data led to the higher £120,000 figure.
Sam Woods, deputy governor for prudential regulation and CEO of the PRA, said the move will help maintain confidence in the safety of money held in banks, building societies, or credit unions. Martyn Beauchamp, CEO of the FSCS, welcomed the change, noting it ensures consumers feel secure with their deposits up to the new limit.
This protection applies automatically if a UK-authorized bank, building society, or credit union fails. It covers eligible deposits such as those in current accounts, savings accounts, and cash ISAs. However, the limit is per person per firm, not per account. For joint accounts, the coverage doubles to £240,000 total, as each holder is protected up to £120,000.
Reasons Behind the FSCS Deposit Limit Hike
The increase reflects consumer price inflation since the last adjustment. Based on September 2025 data, the real-terms equivalent of £85,000 from January 2017 is about £116,770, rounded to £120,000.
The PRA reviewed responses from 19 stakeholders, most supporting the rise, with some pushing for even higher amounts to aid small businesses or competition. The decision balances benefits like enhanced saver confidence against costs to firms, estimated at an additional £7 million in potential levies.
Experts agree the update is timely. Rocio Concha from consumer group Which? called it a sensible step to support confidence without hindering growth. Eric Leenders from UK Finance noted it is right to account for inflation.
Implications for Saver Confidence and Temporary High Balances
With the new limit, about 99% of depositors will be fully protected, up slightly from before. Savers with more than £120,000 in one institution should consider spreading funds across different authorized firms to maximize coverage. Note that banks sharing a license, like those in the same group, count as one firm for protection purposes.
Alongside the main limit, the cap for temporary high balances will rise to £1.4 million from £1 million, protected for up to six months. These apply to funds from life events, such as home sales or inheritances.
Firms must update systems and disclosures by May 31, 2026. This financial compensation scheme update strengthens the UK’s deposit guarantee framework, funded by industry levies, without cost to taxpayers. Savers can check protection using the FSCS online tool.
