The FSCS Limit is Changing!
Hopefully you have heard rumblings this week that the FSCS limit is increasing, but what you might not know is exactly what this means.
What is the FSCS Limit?
The FSCS is an acronym for the Financial Services Compensation Scheme and were set up in 2001 independently from the Government and the Financial Services industry to provide a much-needed service to UK consumers.
Financial Services businesses are charged levies which fund the FSCS and are then used to pay customers of failed Financial Services firms, should they go bust. In 2024-2025 £327 million was paid out to those affected.
The FSCS limit refers to the deposit protection limit which is currently £85,000 per financial institution. This means that if you held £85,000 to the penny in a bank account and that bank subsequently went bust, you should receive £85,000 to the penny back under this scheme.
This amount is per person and per authorised firm, so if you had £500,000 saved with just one bank then you would potentially lose £415,000 (£500k - £85k) if that bank went bust so many choose to spread high balances across numerous banks.
How to use the FSCS Limit to your advantage
The FSCS limit being per authorised firm means that you can protect more of your money across numerous banks, an example could be:
£85,000 with Lloyds
£85,000 with NatWest
£85,000 with Santander
£85,000 with HSBC
All of the above amounts would be protected because they are held with different providers and are within the limit.
It is worth noting that many banks form part of the same group and therefore two separate banks may not actually have separate protections. The biggest example would be the Lloyds group which includes Lloyds Bank, Halifax and Bank of Scotland.
Does the FSCS Limit protect larger balances?
A great point is around large balances held in your bank account following a major life event, such as selling your home, where you may temporarily have considerably more than £85,000 in a single bank account but do not want to be opening accounts all over the place for the sake of protection.
FSCS have a “Temporary High Balance” that will pay compensation up to £1 million instead of the usual £85,000 should you have had a high balance for less than 6 months and the funds being from a qualifying life event. You can check what deems a qualifying life event here.
Is the FSCS Limit increasing?
From 1 December 2025, the FSCS Deposit Protection Limit is increasing from the current £85,000 per person per authorised firm limit, up to £120,000 per person per authorised firm limit. This 41% increase represents a much-needed uplift to protect the savings of people across the UK.
On top of this, the “Temporary High Balance” protection limit is increasing from the current £1 million up to £1.4 million from 1 December 2025.
What does the FSCS Limit increase mean for me?
To be quite honest, there is no real impact on your as a result of this increase but what it does give you is greater protection and flexibility if you are in a cash-strong position. Where you would have previously been considering spreading your funds across multiple banks and finding difficulty with this, you now have more comfort knowing that you can hold higher balances across existing accounts.