There’s good news for savers in the UK. The amount of money protected by the Financial Services Compensation Scheme (FSCS) has increased, meaning more of your savings are now covered if your bank or building society fails.
But what does this change actually mean for you and your savings?
Here’s a simple guide.
What is the FSCS?
The Financial Services Compensation Scheme (FSCS) acts as a financial safety net for consumers. If a UK-regulated bank, building society or credit union goes out of business and can’t return customers’ money, the FSCS can step in and compensate eligible savers.
This protection covers many common savings products, including Cash ISAs, other savings accounts, and even current accounts.
What’s changed?
From 1 December 2025, the FSCS protection limit increased from £85,000 to £120,000 per person, per authorised financial institution.
That means:
- Up to £120,000 of your savings is protected if your bank, building society or credit union fails.
- The limit applies per person, per institution (not per account).
For example:
- If you have £50,000 in a savings account and £40,000 in a current account with the same bank, the total £90,000 is protected.
- If you have £120,000 with one building society or bank and £120,000 with another, the full £240,000 could be protected because each institution has its own limit.
Joint accounts also benefit from double protection. For example, a couple with a joint savings or bank account could have up to £240,000 protected (£120,000 each) with the same institution.
A reminder: protection is per banking licence
One important detail is that FSCS protection applies per authorised firm, not per brand.
Some institutions operate multiple brands under the same banking licence. If you have savings spread across those brands, they may count as a single institution for FSCS protection.
It’s always worth checking this if you hold larger amounts of savings.
Why has the limit increased?
The previous £85,000 limit had been in place since 2017. Regulators decided to increase the cap to reflect inflation and ensure the protection remains meaningful for savers.
The change is designed to maintain confidence in the safety of savings held in the UK financial system.
What about large temporary balances?
There are times when people may temporarily hold large sums of money – for example after selling a home, receiving an inheritance or getting an insurance payout.
In these situations, the FSCS provides temporary high balance protection of up to £1.4 million for up to six months.
This gives people time to move or invest their money while still being protected.
Why this matters for savers
The new £120,000 limit means more people will have their savings fully protected. In fact, the vast majority of UK savers already hold less than this amount in cash savings.
For most people, this means they can save with confidence knowing their money is protected.
And that confidence matters. Feeling secure about where you keep your money can make it easier to build savings habits, whether you’re putting aside a small emergency fund or saving for a bigger goal.
