The Prudential Regulation Authority Proposes Raising FSCS Deposit Protection Limit to £110,000

The Prudential Regulation Authority (PRA) has today proposed to raise the deposit  protection limit of the Financial Services Compensation Scheme (FSCS) from £85,000 to  £110,000. 

The deposit protection limit – which represents the maximum amount of money the FSCS  typically protects should a depositor’s bank, building society or credit union become  insolvent – has been set at £85,000 since 2017. 

The proposed increase takes into account inflation since the limit was last changed, and is  designed to give consumers confidence that their money is safe if their UK-authorised  bank, building society or credit union fails. If taken forward, the new limit would apply to  firms that fail from 1 December 2025. 

Sam Woods, Deputy Governor for Prudential Regulation and CEO of the PRA said: “Confidence in our financial system is an essential foundation for economic growth. We  want to support confidence in our banks, building societies and credit unions by raising the  amount that people can keep in their account which is covered by the deposit guarantee  scheme to £110,000 per person, so all that money is safe even if the firm fails.”  

Martyn Beauchamp, CEO of the FSCS, said: “Depositor protection is what FSCS is best  known for, as it covers the money held in our day-to-day current accounts and savings.  Consumers tell us that the existence of FSCS protection is a key driver of their trust in  financial services, and this trust is in turn a critical component of stability and growth. It’s  important that FSCS’s limit is reviewed to ensure it stays appropriate and relevant.”

Rocio Concha, Which? Director of Policy and Advocacy, said: “Raising the deposit  protection limit is a sensible decision to support consumer confidence in the financial  service industry. At a time when the government and regulators are going for growth, this  decision is a reminder that strong consumer protections and economic growth go hand in  hand.” 

Eric Leenders, Managing Director for Personal Finance at UK Finance, added: “The FSCS  provides depositors with valuable protection and underpins confidence in the UK’s  financial system. The current limit of £85,000 was set back in 2017 and so it makes sense  to review it. We look forward to working with the Prudential Regulation Authority as part of  their consultation into the wider FSCS deposit protection system”.  

The FSCS, established in 2001, has paid compensation of £10.1 million to depositors in  the past three full financial years, primarily in relation to small credit union failures. Since it  was established, the FSCS has paid over £20 billion, primarily in relation to deposit failures  during the 2008 financial crisis. 

The proposal comes as part of a wide-ranging consultation on deposit protection provided  by the FSCS. Other proposals include: 

• An increase in the limit applicable to certain temporary high balance claims – used  for qualifying life events like buying or selling a house and payouts from insurance  policies – from £1 million to £1.4 million, with effect from 1 December 2025. 
• Introducing rules needed to facilitate the Bank Resolution (Recapitalisation) Bill,  which proposes a new resolution tool enabling industry funds provided via the  FSCS to be used to recapitalise a failing firm to support its sale or transfer to a  bridge bank. The PRA proposes to make these rules once the relevant provisions in  the Banking Resolution (Recapitalisation) Bill have been enacted and brought into  force.