UK savers are holding record amounts in cash savings, yet many don’t fully understand how much of their money is protected if their bank fails. The Financial Services Compensation Scheme (FSCS) has recently increased its coverage limit from £85,000 to £120,000 per individual, per authorized UK bank, building society, or credit union.
Under the new rules, savers will receive 100% reimbursement on the first £120,000 of their deposits if their bank collapses—typically within seven working days. For joint accounts, the protection doubles to £240,000.
A common misconception is that spreading money across multiple accounts automatically increases protection. The FSCS, however, covers deposits on a per-authorized institution basis, not per account. For example, if you hold £120,000 in a current account plus another £120,000 in a savings account at the same bank, only £120,000 is covered, not the full £240,000.
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Further complexity arises because many large banks operate various brands under a single banking licence. For instance, HSBC and First Direct share the same FSCS limit, meaning the combined protected amount across these brands remains £120,000.
For those recently receiving a substantial sum—such as from property sales, inheritances, or insurance payouts—there is additional protection. The FSCS offers “temporary high balance” coverage for up to six months after such events, raising the protection from £1 million to £1.4 million. This protection requires proof of the origin of funds in the event of a bank failure.
To confirm how much of your money is protected, the FSCS provides an online tool where you can enter your bank’s name or registration number along with your deposit amount. It’s important to use the exact bank name or six-digit Financial Conduct Authority registration number for accurate results.
Note that FSCS compensation does not cover funds held with e-money institutions or payment services firms, so money stored with those providers is not protected.
The Bank of England’s Prudential Regulation Authority increased the FSCS limit to keep compensation in line with rising inflation, which currently exceeds its target. Experts believe the new £120,000 threshold will boost confidence in UK banks, especially after recent financial uncertainties.
Savvy savers will benefit most by understanding their protection limits and planning their deposits accordingly, rather than assuming all their accounts are fully secure by default.