Banks’ customers will be protected by up to £120,000 if their provider fails

UK banks’ customers will be protected from December by up to £120,000 if their provider fails.

The new limit, which will increase from £85,000, was confirmed by the Prudential Regulation Authority (PRA).

The limit applies under the Financial Services Compensation Scheme (FSCS), meaning that from December 1 2025, up to £120,000 of a customer’s money will be protected if their UK-authorised bank, building society or credit union goes out of business.

The current £85,000 deposit protection limit 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.

The compensation limit applies per person, per authorised firm. Customers will typically get their money back within seven days of the firm going out of business, the FSCS said.

Customers do not need to do anything as the new deposit protection limit will apply automatically.

Some account providers have more than one brand sharing a banking licence under the same group, so it is important for people to check whether their provider shares a banking licence with other brands where they hold an account.

If customers hold money in several accounts with multiple banks that are part of the same banking group and share a banking licence, the compensation limit applies to the total amount held across these accounts.

Sam Woods, deputy governor for prudential regulation at the Bank of England and chief executive 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, chief executive of the FSCS, said: “We welcome today’s announcement from the Prudential Regulation Authority 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 banking and finance industry body 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 December 1, 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 such as buying or selling a house and payouts from insurance policies and will increase from £1 million to £1.4 million.

The FSCS protects temporary high balances for six months from when the money is credited into an account.

It will continue to work with the PRA and industry partners to raise awareness of the new limit and the “FSCS protected” badge, supporting firms during the transition. The current badge may still appear until May 2026, as firms update their materials.

The FSCS is funded by a levy on financial firms authorised by the PRA or the Financial Conduct Authority (FCA).