UK bank deposit protection to rise to £120,000 from December

UK bank and building society customers will soon benefit from a significant increase in the amount of money protected in the event their banks fail, after regulators confirmed that the deposit limit in the Financial Services Compensation Scheme (FSCS) will rise from £85,000 to £120,000.

The change, announced by the Prudential Regulation Authority (PRA), represents the biggest increase since 2017 and reflects updated inflation data and industry commentary. It will come into effect in December, with customers automatically covered – no action required from account holders.

Martin Beauchamp, chief executive of FSCS, said the increase would give consumers stronger reassurance at a time of economic uncertainty.

“This rise ensures that consumers feel confident that their money is safe, from the first penny right up to £120,000,” he said.

The FSCS protects deposits per person, per approved company, meaning multiple accounts held under the same banking license share the £120,000 cap. Many major banks operate multiple brands under a single license – a detail the PRA encourages consumers to check.

Sam Woods, Deputy Governor of the Bank of England for Prudential Regulation and Chief Executive of the Risk Assessment Authority, said the reform enhances financial stability and public confidence.

“This change will help maintain public confidence in the safety of their money,” he said. “Depositors will be protected up to £120,000 if their bank, building society or credit union fails.”

Consumer groups welcomed the move. any? He described it as a “reasonable decision” that strengthens confidence in the financial services sector without restricting economic growth. Rocío Concha, the group’s director of policy and advocacy, said the increase was a “timely reminder that strong consumer protections should not get in the way of these goals.”

Industry representatives also supported the decision. Eric Linders, managing director of personal finance at UK Finance, said the inflation limit adjustment was “correct” and that the sector would work with regulators to ensure smooth implementation.

As part of the same update, the RRA confirmed a rise in the temporary high balance cap – which protects large sums resulting from major life events such as house sales, inheritances or insurance payouts. This limit will increase from £1 million to £1.4 million, and will apply for six months from the moment the balance enters the account.

The FSCS is funded by a levy on PRA and FCA regulated companies, not by taxpayers.