UK savers are holding record amounts of cash, yet many remain unaware of the protections in place if their banks fail. The Financial Services Compensation Scheme (FSCS) has recently increased the compensation limit from £85,000 to £120,000 per individual at each UK-regulated bank, building society, or credit union.
According to MoneySavingExpert, you can now expect to recover 100% of the first £120,000 if your bank collapses—usually within seven working days. For joint accounts, this protection doubles to £240,000.
However, it’s vital to understand that FSCS coverage applies per authorised institution, not per individual account. Holding £120,000 in both a current and savings account at the same bank still means only £120,000 is protected—not £240,000.
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Confusingly, some major banks operate multiple brands under a single banking licence. For example, First Direct and HSBC share the same protection threshold, which means combined deposits across both count towards the £120,000 limit.
For those who recently received a substantial sum from events like property sales, inheritances, or insurance payouts, there is temporary relief. The FSCS’s “temporary high balance” protection has been raised from £1 million to £1.4 million for six months after such life events. However, this coverage isn’t automatic—you must provide evidence of the funds’ origin if your bank fails.
To avoid surprises, savers should use the FSCS’s online tool to check how much of their money is covered at a specific bank or building society. It’s important to enter the correct institution name or Financial Services Register Number (FRN). Keep in mind that e-money institutions and payment services are not covered by FSCS, so deposits with these providers are not protected.
The Bank of England’s Prudential Regulation Authority increased the FSCS limit to keep compensation aligned with current inflation rates, which are above target. Experts believe that raising the threshold to £120,000 will boost confidence in UK banks, especially after recent banking challenges. Ultimately, the biggest advantage goes to savers who actively verify their protection and manage their accounts wisely, rather than assuming all funds across accounts are secure.