News release
From the start of December, UK bank customers will benefit from an increase to the maximum amount they would be reimbursed for if their bank were to fail.
The Prudential Regulation Authority (PRA) has today confirmed the deposit protection limit, which applies to the Financial Services Compensation Scheme, will protect up to £120,000 of a depositor’s money should their bank, building society or credit union fail.
This increases the limit from the current £85,000 which was set in 2017. It is also more than the previous PRA proposal of £110,000, which has been changed in light of consultation feedback and to reflect the latest inflation data.
This increase in the deposit protection limit is the latest in a series of regulatory thresholds to be updated by the PRA, ensuring the rulebook is modernised and fit for today’s circumstances.
Sam Woods, Deputy Governor for Prudential Regulation at the Bank of England and CEO of the PRA said: “This change will help maintain the public’s confidence in the safety of their money. It means that depositors will be protected up to £120,000 should their bank, building society or credit union fail. Public confidence supports the strength of our financial system.”
Martyn Beauchamp, CEO of the FSCS, said: “We welcome today’s announcement from the Prudential Regulation Authority (PRA) confirming that the FSCS deposit protection limit will increase. This rise ensures that consumers can feel confident their money is safe, from the very first penny up to £120,000. At FSCS, we know that trust in financial services is vital for stability and growth. This enhanced protection will reassure consumers and support confidence in the UK’s financial system.”
Rocio Concha, Which? Director of Policy and Advocacy, said: “Increasing the deposit protection limit is a sensible decision to support consumer confidence in the financial services industry.
“It is also a timely reminder that, at a time when the government and regulators are trying to boost economic growth, strong consumer protections needn’t hamper those aims.”
Eric Leenders, Managing Director of Personal Finance at UK Finance, said: “The FSCS provides depositors with valuable protection as they know their money is safe. As the current limit of £85,000 was set back in 2017, it is right to update it to take account of inflation. We will now work to support our members to implement these changes and ensure customers have all the information they need about FSCS deposit protection”.
On 1 December an increase in the limit applicable to certain temporary high balance claims will also come into force. This limit is used for qualifying life events like buying or selling a house and payouts from insurance policies and will increase from £1 million to £1.4 million.
To support the changes to the deposit protection limit and temporary high balance limit, and to ensure that communications available for depositors remain clear and up to date, the PRA has made revisions to the FSCS disclosure materials. These include the information sheet that firms need to send to depositors and the information to be displayed in branches. Firms need to update this information by the end of May 2026.
Notes to editors
- See the full policy statement.
- This follows on from the consultation launched earlier this year, which proposed a £110,000 limit – see CP4/25 – Depositor protection
- The PRA can confirm that HM Treasury has approved the change to the deposit protection limit.
- Eligible deposits are protected up to the deposit protection limit that is in effect at the time of the failure of a PRA-authorised deposit taker. The protection is provided per depositor, per PRA-authorised institution. Depositors can fully protect their deposits by spreading their funds across different authorised institutions. Additional protection is available in certain situations in relation to Temporary High Balances connected with prescribed ‘life events’, which might result in deposit balances being temporarily high – for example ahead of a residential property transaction. To maintain depositors’ confidence, it is important that these limits are set at an appropriate level and are reviewed in light of changes in the economy and financial system.
- The FSCS also protects policyholders when insurers fail. Policyholders’ claims are protected up to 90% for insurances like home or travel, and 100% for life insurance and pensions.
- The PRA is responsible for oversight of, and rules relating to, FSCS protection in respect of deposits and insurance policies. The FCA is separately responsible for FSCS protection in relation to certain other regulated activities, including investment provision and distribution, home finance, debt management, funeral plan provision and insurance distribution.
