Have you heard the good news for savers? From 1 December 2025, the amount of money protected if a UK bank, building society or credit union fails will increase from £85,000 to £120,000 per person, per institution. This change, announced by the Bank of England’s Prudential Regulation Authority, is designed to give you even more peace of mind that your cash is safe.
What is the FSCS and What’s Changing?
The Financial Services Compensation Scheme (FSCS) is the UK’s deposit protection scheme. If a UK-authorised bank, building society or credit union were to go out of business and couldn’t return your money, the FSCS steps in to reimburse eligible deposits up to a certain limit. Until now that standard protection limit has been £85,000 per person, per institution. From 1 December 2025, this limit rises to £120,000.
How does it work? Let’s break it down:
- Per person, per institution – The £120,000 cap applies to each individual and each separate institution. If you have £120,000 in Bank A and £50,000 in Bank B, both amounts are fully protected (one doesn’t affect the other).
- Shared banking licences – Some banks and building societies share a licence (meaning they are part of the same authorised institution). For example, different brands under one banking group often operate under one licence. In those cases, the combined balance across all those brands is protected up to £120,000 total, not per brand.
- Joint accounts – If you have a joint account with your spouse or someone else: FSCS protection applies per person. A £200,000 joint account, for instance, would be covered in full (£120,000 for each of two people = £240,000 total).
- Temporary high balances – The regulators have also raised the separate protection for temporary high balances to £1.4 million (up from £1 million). This covers certain large sums from life events (like house sale proceeds, inheritances, or insurance payouts) for up to six months.
No action required. This protection limit increase is automatic. You don’t need to fill out any forms or opt in, if you’re with a UK-authorised institution, the new £120,000 FSCS cover will apply from 1 December 2025 onwards by default.
What Should You Do Now?
For many clients, this change won’t require any immediate change in behaviour, but it’s an excellent moment to review your savings strategy:
- Spread out large sums:If you’re fortunate enough to have more than £120,000 in cash, consider spreading it across multiple institutions to keep each account within the protected limit. Alternatively NS&I savings have an unlimited protection amount if you prefer to have all cash in one place.
- Temporary windfalls: If you expect a short-term large balance (like selling a property or business), remember that up to £1.4 million is protected for 6 months. Still, you’ll want to plan promptly how to distribute or invest those funds after that period for both protection and growth.
- Stay informed: Banks will update their materials with the new “FSCS Protected” badge and limit. The FSCS website is also a great resource if you’re unsure about coverage for a particular account or need guidance on the scheme’s details.
- Talk to us: If you’re not sure whether your cash holdings are optimally placed, we’re here to help. We can discuss questions like “Should I keep all my savings in one bank or spread them?” in light of the new protection limit, and how this fits into your wider financial plan (for instance, considering when to move excess cash into investments or other vehicles for better returns, once you’ve kept enough rainy-day funds).
Closing Thoughts
The increase of the FSCS deposit protection limit to £120,000 is a positive development for savers. It means a larger cushion against the unexpected and one less thing to worry about in managing your money. We encourage you to take a moment to reflect on your current banking set-up: Are you making the most of the protection available? Are your savings working efficiently for you? With greater protection in place, you might choose to consolidate certain accounts, or you might simply sleep easier knowing more of your cash is covered.
As always, if you’d like to discuss how this change affects your specific circumstances, or if you have any other questions about keeping your money safe and working hard, please don’t hesitate to reach out to us. Feel free to share this update with friends or family who might be interested; it’s news that benefits everyone with a UK bank account.
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