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. 

1. Read the full consultation.
2. The consultation opens on 31 March 2025. Responses in relation to the proposals in connection with the limit of protection available from the FSCS are requested by 30 June 2025 whilst responses in relation to the proposals in connection with the implementation of the Bank Resolution (Recapitalisation) Act are requested by 30 April 2025.
3. The PRA expects to confirm the outcome of its consultation in November 2025, with any change to the deposit protection limit requiring approval from HM Treasury.
4. 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.
5. HM Treasury consulted on the proposals in the Bank Resolution (Recapitalisation) Bill in January 2024. The Bill 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, where its use is judged to be in the public interest. Subject to consultation responses, the PRA proposes to make the rules once the relevant provisions in the Banking Resolution (Recapitalisation) Bill have been enacted and brought into force.