Bank Deposit Guarantees Have Increased – But Are Your Savings Still Fully Protected?

From 1 December 2025, the UK’s Financial Services Compensation Scheme (FSCS) deposit protection limit will increase from £85,000 to £120,000 per person, per authorised institution.

What is the FSCS Protection limit?

The FSCS protects eligible deposits held with UK-authorised banks, building societies and credit unions if the institution fails.

What does the increase mean?

This is a significant boost for savers who prefer to keep money in cash, but it doesn’t eliminate risk. It highlights how easy it is to exceed protection without realising it, especially if you misunderstand how the scheme works.

Is the limit applicable to each bank?

Many savers mistakenly think different “brands” mean different protections. In reality, several bank brands may operate under the same banking licence, so the £120,000 limit applies across all those brands combined. It is therefore important to check which regulated entity sits behind your account.  More information can be found on fscs.org.uk.

Do all types of bank accounts count towards the limit?

The FSCS covers personal accounts, joint accounts, cash ISAs and most small business accounts.

Joint accounts benefit from the protection applying per person. With the new limit, a joint account could be protected up to £240,000 in total (i.e., £120,000 each), assuming both account holders are eligible. However, each person’s share of the joint balance also counts towards their own total with that banking licence.

Cash ISAs do not receive separate FSCS protection. They form part of the same £120,000 total for that banking licence, so the combined balance of your cash ISA and other savings accounts is what matters.

What if I have a temporary but significant increase in by balance?

A lesser-known feature of the FSCS is temporary high-balance cover. From 1 December 2025, this rises from £1 million to £1.4 million for up to six months if your balance increases due to certain life events. These include selling your main home (but not other properties), receiving an inheritance, divorce settlements, insurance or compensation payouts, pension lump sums, or estate proceeds. To benefit, you should keep documentation proving the source of the money, such as contracts or settlement statements as this would need to provided, if you needed to claim.

Practical Tips to Stay Protected

The rise in the FSCS limit to £120,000 per person per Banking licence is an important step in the right direction for savers. But peace of mind comes from understanding how the rules work and avoiding common traps. With a little planning and awareness, you can ensure your cash remains fully protected.

• Spread savings across different authorised firms

• Use joint accounts strategically

• Check banking licences before depositing large sums

• Keep documentation for large life-event payments

• Review balances after major transactions

Final Thoughts

Risk averse savers often hold large sums in cash, but this is not without risk.  If this applies to you, please let us know as we are here to help. We can share details of some trusted local financial advisers so you can speak to them and choose the one that feels right for you.

Written by Ffion Bainbridge