A new bank protection limit of £120,000 is set to take effect from December, in what would be the first change to the UK’s savings safety net since 2017. The move, reported on Tuesday, aims to strengthen confidence in the banking system and give savers more headroom if a bank or building society fails. Under the change, eligible deposits would have a higher guaranteed level of protection through the Financial Services Compensation Scheme (FSCS). Customers will not need to take any action for the new limit to apply, as protection operates automatically when an authorised firm collapses. The increase follows years of inflation and market change since the last review, when the UK reset cover to £85,000 per person, per bank.
The updated limit would apply across the UK’s authorised banks, building societies, and credit unions. It would cover individuals, small businesses, and charities that meet eligibility rules. While the headline figure marks a significant uplift, the way protection works across banking groups, joint accounts, and temporary high balances remains vital for savers to understand.
When and where the change applies
The higher protection level is due to apply nationwide from December 2025, covering eligible deposits held with UK-authorised firms. The FSCS confirms protection only for firms authorised by the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). Savers can check a firm’s status on the Financial Services Register.
What the new £120,000 protection means for savers
The FSCS is the UK’s statutory compensation scheme for customers of authorised financial firms. It protects cash savings up to a fixed limit if a bank, building society, or credit union fails. According to the latest report, that limit will rise to £120,000 per eligible person, per banking group, from December. Protection applies automatically; customers do not need to register or submit a claim to trigger cover for straightforward deposit payouts.
The higher ceiling increases the amount that many savers can hold with a single banking group without exceeding the protected limit. For joint accounts, FSCS protection typically applies per person, so a couple’s total protected amount across a joint account may be double the individual limit with the same authorised group. Savers who hold large balances should still check how their money sits across brands that share the same banking licence.
Why the UK is updating the limit for the first time since 2017
The deposit protection limit last changed in 2017, when the UK recalibrated FSCS cover to £85,000. That level aligned broadly with a €100,000 EU benchmark, adjusted for exchange rates at the time. Since then, inflation and shifts in savings behaviour have increased the number of people holding larger cash balances, particularly after interest rates rose from record lows.
Regulators review protection frameworks to support financial stability and consumer confidence. A higher limit provides a wider buffer in the unlikely event of a bank failure, reducing the risk of panic and rapid withdrawals. The update also reflects lessons from banking shocks abroad, where deposit safety nets played a key role in steadying markets.
How coverage works across banks, brands, and groups
FSCS protection applies per person, per authorised banking group, not per brand. Several household names share a single banking licence under one group. For example, Lloyds Bank, Halifax and Bank of Scotland sit under the Lloyds Banking Group licence; HSBC UK and First Direct sit under HSBC UK; NatWest and Royal Bank of Scotland sit under NatWest Group. If you hold money across brands in the same group, the balances count together towards the limit.
Savers should check which brands share a licence to avoid accidental overexposure. The FSCS and the Financial Services Register publish licence and group information. Building societies such as Nationwide and banks such as Barclays each have their own licence, so balances with them count separately under the limit.
Temporary high balances and special life events
On top of the standard limit, the FSCS offers extra protection for “temporary high balances” linked to life events such as property sales, inheritance, divorce settlements, redundancy payments, or insurance payouts. This separate cover can extend into the millions for up to six months, depending on the event and documentation. It exists to protect customers during short periods when balances exceed the standard limit for reasons beyond normal saving.
Customers should keep clear records for any temporary high balance claim. The FSCS sets event types, time windows, and evidence requirements. The scheme assesses eligibility case by case, so savers who expect a large inflow should check the rules in advance and consider spreading funds if they wish to remain within the standard limit long term.
What customers need to do now
Customers do not need to do anything for the new limit to apply. The FSCS operates automatically when an authorised firm fails, and it aims to repay most protected depositors within seven working days. Payments can arrive by transfer to a new account or as a cheque. The process depends on the failure and the arrangements the resolution authority puts in place.
Even so, a few simple steps help. Savers can review their balances and check which brands share a licence. If any balance will sit above the new £120,000 limit with a single group, consider spreading money across separate, FSCS?protected institutions. Keep contact details up to date with your bank and maintain records of any life events that create a temporary high balance. Businesses and charities should also confirm eligibility, as some specialist accounts and non-UK branches may not qualify.
Industry context and what to watch next
Consumer groups have argued for strong, simple guarantees that the public can trust. A higher limit gives many savers a clearer margin and may reduce the need to split funds across multiple accounts. Banks and building societies will update customer materials and product pages to reflect the new figure once it takes effect.
Regulators will publish technical guidance and confirm how the updated limit interacts with joint accounts, currency accounts, and complex group structures. Savers should look out for official notices from their providers and from the FSCS. The core principles—authorisation status, per?group limits, and automatic protection—remain the foundation of the scheme.
As December approaches, the focus turns to implementation. Banks will adjust their disclosures, and comparison sites will update their coverage tables. Financial advisers expect the change to influence how high-net-worth
