Savings protection limit raised to £120,000

The Financial Services Compensation Scheme (FSCS) has raised its deposit protection limit from £85,000 to £120,000.

How FSCS protection works (and who is covered)

This means that if you hold deposits or savings with a UK-authorised bank, building society or credit union which goes out of business, FSCS will compensate you up to £120,000 per person, per authorised firm.

If you have an account under joint names, you have up to £240,000 of your deposits protected, providing you do not have an individual account at the same institution as their joint account.

Temporary high balance protection increased to £1.4m

In addition to this change – which will cover balances on a permanent basis – the FSCS has also announced an increase in the protection given for temporary high balances.

The FSCS will now cover temporary high balances – such as the proceeds of a house sale or an inheritance – up to the sum of £1.4m, instead of the previous limit of £1m.

Such an amount will be protected for up to six months after the date at which the sum is deposited.

Why has the FSCS deposit limit increased?

The previous deposit compensation limit of £85,000 was established at the start of 2017.

Under the Deposit Guarantee Scheme Regulations 2015, the Prudential Regulation Authority (PRA) must review the FSCS deposit compensation limit periodically and at least every five years.

The PRA consulted on a proposed increase to the deposit compensation limit in March 2025 and confirmed its final rules in November 2025.

The new limit takes into account rises in inflation over the past eight years.

What hasn’t changed?

Investments are protected by the FSCS at £85,000 per person, per UK-regulated institution.

However, this limit will not be increasing in line with the limit for savings institutions and will stay at £85,000.

What kind of savings are covered?

Only banks, building societies and credit unions recognised by the FSCS are covered by the scheme and attract the new higher level of cover.

This information should be prominently displayed on institutions’ websites and in marketing materials.

A new logo indicating protection by FSCS has also been introduced and is below:

You can also check whether a bank or savings provider is covered by the scheme by using the FSCS online tool.

What to do if you have more than £120,000 in savings

While the new deposit limit will help many savers, it will not cover amounts over £120,000 in one individual account.

In such cases, to ensure that all your savings are covered, you should consider dividing the money into more than one account in more than one eligible institution.

One straightforward way of doing this is via a cash management platform, such as that offered by providers including Insignis and Raisin.

A cash management platform allows multiple accounts with multiple providers to be managed via a single platform and single log-in.

Providing the savings institutions are recognised and you don’t put in more than £120,000 into one account, all your savings will be protected by the FSCS deposit protection scheme.

Key takeaways – how a financial adviser can help with savings

The FSCS deposit protection scheme offers important peace of mind for savers. The extension of its limit to £120,000 expands the maximum cash protected by more than 40%.

However, account holders with such sums in standard savings accounts will pay tax on interest earned over £1,000 in any financial year.

The purchasing power of your money is also likely to be eroded by the effects of inflation.

Talking to a financial adviser could help you consider other options to make more of your money, including ISAs and other tax-efficient investments.

To get more information on how to make your savings work harder for you, get in touch today.