From the start of December, UK bank customers will benefit from
an increase to the maximum amount they would be reimbursed for if
their bank were to fail.
The Prudential Regulation Authority (PRA) has today confirmed the
deposit protection limit, which applies to the Financial Services
Compensation Scheme, will protect up to
£120,000 of a depositor's money should their bank, building
society or credit union fail.
This increases the limit from the current £85,000 which was set
in 2017. It is also more than the previous PRA proposal of
£110,000, which has been changed in light of consultation
feedback and to reflect the latest inflation data.
This increase in the deposit protection limit is the latest in a
series of regulatory thresholds to be updated by the PRA,
ensuring the rulebook is modernised and fit for today's
circumstances.
Sam Woods, Deputy Governor for Prudential Regulation at
the Bank of England and CEO of
the PRA said:
“This change will help maintain the public's confidence in the
safety of their money. It means that depositors will be protected
up to £120,000 should their bank, building society or credit
union fail. Public confidence supports the strength of our
financial system.”
Martyn Beauchamp, CEO of the FSCS, said: “We
welcome today's announcement from the Prudential Regulation
Authority (PRA) confirming that the FSCS deposit protection limit
will increase. This rise ensures that consumers can feel
confident their money is safe, from the very first penny up to
£120,000. At FSCS, we know that trust in financial services is
vital for stability and growth. This enhanced protection will
reassure consumers and support confidence in the UK's financial
system.”
Rocio Concha,
Which? Director
of Policy and
Advocacy, said: "Increasing the
deposit protection limit is a sensible decision to support
consumer confidence in the financial services industry.
"It is also a timely reminder that, at a time when the government
and regulators are trying to boost economic growth, strong
consumer protections needn't hamper those aims."
Eric Leenders, Managing Director of Personal Finance at
UK Finance, said: “The FSCS provides depositors with
valuable protection as they know their money is safe. As the
current limit of £85,000 was set back in 2017, it is right to
update it to take account of inflation. We will now work to
support our members to implement these changes and ensure
customers have all the information they need about FSCS deposit
protection”.
On 1 December an increase in the limit applicable to certain
temporary high balance claims will also come into force. This
limit is used for qualifying life events like buying or selling a
house and payouts from insurance policies and will increase from
£1 million to
£1.4 million.
To support the changes to the deposit protection limit and
temporary high balance limit, and to ensure that communications
available for depositors remain clear and up to date, the PRA has
made revisions to the FSCS disclosure materials. These include
the information sheet that firms need to send to depositors and
the information to be displayed in branches. Firms need to update
this information by the end of May 2026.
Notes to
editors
- The full policy statement can be viewed here.
- This follows on from the consultation launched earlier this
year, which proposed a £110,000 limit and can be viewed here:
CP4/25
– Depositor
protection |
Bank of England
- The PRA can confirm that HM Treasury has approved the change
to the deposit protection limit.
- Eligible deposits are protected up to the deposit protection
limit that is in effect at the time of the failure of a
PRA-authorised deposit taker. The protection is provided per
depositor, per PRA-authorised institution. Depositors can fully
protect their deposits by spreading their funds across different
authorised institutions. Additional protection is available in
certain situations in relation to Temporary High Balances
connected with prescribed ‘life events', which might result in
deposit balances being temporarily high – for example ahead of a
residential property transaction. To maintain depositors'
confidence, it is important that these limits are set at an
appropriate level and are reviewed in light of changes in the
economy and financial system.
- The FSCS also protects policyholders when insurers fail.
Policyholders' claims are protected up to 90% for insurances like
home or travel, and 100% for life insurance and pensions.
- The PRA is responsible for oversight of, and rules relating
to, FSCS protection in respect of deposits and insurance
policies. The FCA is separately responsible for FSCS protection
in relation to certain other regulated activities, including
investment provision and distribution, home finance, debt
management, funeral plan provision and insurance distribution.
