The Financial Services Compensation Scheme (FSCS) protects money held in UK banks, building societies and credit unions, and the limit rose to £120,000 for firms that fail on or after 1 December 2025. This article explains what the limit covers, how it is counted, and where savers most often misread it.
What changed on 1 December 2025?
According to the Bank of England, the Prudential Regulation Authority (PRA) confirmed in November 2025 that the deposit protection limit would increase to £120,000 per depositor, per authorised institution. It replaced the £85,000 limit that had applied since 2017. The Bank of England states that HM Treasury approved the change, and that an earlier proposal of £110,000 was revised “to reflect the latest inflation data”.
The FSCS says that for firms failing after 30 November 2025, it covers up to £120,000 per eligible person, per bank, building society or credit union. The rule that matters is the one in force on the date a firm fails, so a failure before 1 December 2025 would still be assessed against the old £85,000 figure.
How the limit has moved over time
The FSCS publishes the history of the limit. As of October 2026, the figures it lists are:
| Period | Limit |
|---|---|
| 1 December 2001 to 30 September 2007 | £31,700 |
| 7 October 2008 to 30 December 2010 | £50,000 |
| 31 December 2010 to 31 December 2015 | £85,000 |
| 1 January 2016 to 29 January 2017 | £75,000 |
| 30 January 2017 to 30 November 2025 | £85,000 |
| From 1 December 2025 | £120,000 |
The limit therefore rose to £85,000 at the end of 2010, briefly stood at £75,000 during 2016, and returned to £85,000 in 2017. The FSCS also lists an interim step between 2007 and 2008, left out of the table.
The PRA is required to review the limit periodically and at least every five years under the Deposit Guarantee Scheme Regulations 2015, according to the FSCS. That is why the number tends to change in steps rather than continuously.
What does “per person, per firm” actually mean?
The limit attaches to the person and the authorised firm, not to the account. A saver with a current account, an easy-access account and a fixed-term bond at the same bank has one £120,000 limit across all of them, not one limit for each product.
This is the single most common misunderstanding. Opening more accounts at the same provider adds convenience, not protection. Protection is multiplied only by spreading money across separate firms, and even then the definition of “separate” matters, as the next section shows.
Do all brands count as separate banks?
No. The FSCS says that banks in the same banking group that share a banking licence are treated as one bank. The £120,000 limit applies to the total held across all of them. Accounts get their own limit only when held with banks that do not share a licence. The Financial Services Register shows which brands share a licence.
For anyone holding savings with several well-known names, this check is worth doing because a high street brand and a differently branded savings arm can sit under one licence.
How joint accounts are counted
The FSCS says joint accounts are covered up to the same £120,000 limit per eligible person. Two holders of a joint account are therefore each entitled to their own share of protection. It also says that where a person holds both an individual account and a joint account within the same banking group, the £120,000 limit applies across both.
A worked example with illustrative figures
The arithmetic below is illustrative and uses invented balances to show how the rules interact. It assumes every account is with an eligible, authorised firm.
| Situation | Total held | Protected | Above the limit |
|---|---|---|---|
| One person, one bank, £150,000 | £150,000 | £120,000 | £30,000 |
| Same person splits £75,000 across two banks with separate licences | £150,000 | £150,000 | £0 |
| Same person splits £75,000 across two brands that share a licence | £150,000 | £120,000 | £30,000 |
| Couple, joint account only, £240,000 | £240,000 | £240,000 | £0 |
The final row works because each of the two holders has a £120,000 limit: 2 × £120,000 = £240,000. If either partner also holds an individual account at the same banking group, the combined holdings for that person are measured against one £120,000 limit.
Why larger temporary balances are treated differently
Some balances are large for a short time because of a major life event. The FSCS says qualifying temporary high balances are protected up to £1.4 million for six months from when the amount was first deposited. Qualifying events include selling a home or receiving an inheritance, and the Bank of England adds insurance payouts and buying a house to its list.
According to the Bank of England, this temporary limit rose from £1 million to £1.4 million on 1 December 2025. The FSCS says no action is needed in advance if a provider fails, though complex claims require contacting the scheme to complete an application form.
Two practical points follow. The protection runs for a fixed six months, so it is a window rather than a standing arrangement. And the money still needs to be in a qualifying deposit with an authorised firm for the protection to apply.
What is not covered by the deposit limit?
The £120,000 figure applies to deposits and savings. The FSCS states that pensions, investments, insurance, mortgages, debt management and funeral plans each have their own, separate limits. Money in an investment account is therefore not protected by the deposit limit, even if the platform sits inside a banking group.
Business customers are also covered but with distinctions. According to the FSCS, a limited company or limited liability partnership can claim up to £120,000 per account, a sole trader can claim up to £120,000 in total rather than per account, and a business partnership with a joint account gets a single £120,000 claim.
How quickly would money be returned?
The FSCS aims to pay compensation within seven working days of a bank, building society or credit union failing. This is automatic in standard cases. More complex cases, including temporary high balance claims, take longer.
That speed is relevant to the way people think about liquidity. A current account balance that ordinarily pays bills is protected within the same limit, so a short delay in access is the main practical risk in a failure rather than a permanent loss up to the limit. For a wider look at holding buffers, see building a practical financial safety net.
Where the limit sits alongside other banking questions
Deposit protection is one of several safeguards in the banking system. Payment protections work differently, as explained in how UK bank transfers work, and the cost of holding an account is a separate matter covered in why banks charge different fees. Savers weighing where to hold cash may also want to see what the Cash ISA limit cut means for savers, because tax wrappers and protection limits operate independently: an ISA does not enlarge the FSCS limit.
Reading the limit sensibly
Because the limit is reviewed only periodically, its real-terms value drifts between reviews as prices rise, which is why the 2025 increase was framed around inflation data rather than any change in how the scheme works.
The £120,000 limit is a rule about counting. It is applied per person and per authorised firm, shared licences merge brands into one, joint accounts double the headline number for two holders, and large short-term balances from life events have their own higher, time-limited cover. Anyone with balances near or above the threshold has reason to check which licence each provider sits under and to understand which of their balances are deposits at all.
This article is general information, not personalised financial advice. Rules, limits and rates change.
Sources: Financial Services Compensation Scheme; Bank of England
