Banks’ customers will be protected by up to £120,000 from December 2025

From December, UK banks’ customers will be protected by up to £120,000 if their provider fails. This new limit, an increase from the current £85,000, has been confirmed by the Prudential Regulation Authority (PRA).

Under the Financial Services Compensation Scheme (FSCS), this means that from December 1, 2025, up to £120,000 of a customer’s money will be protected if their UK-authorised bank, building society or credit union goes under. The existing £85,000 deposit protection limit was established in 2017. It is also higher than the previous PRA proposal of £110,000, which has been revised following consultation feedback and to reflect the latest inflation data.

If customers have money in several accounts with various banks that are part of the same banking group and share a banking licence, the compensation limit applies to the total amount held across these accounts.

Sam Woods, deputy governor for prudential regulation at the Bank of England and chief executive 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, chief executive of the FSCS, commented: “We welcome today’s announcement from the Prudential Regulation Authority 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.

The compensation limit applies per person, per authorised firm. Typically, customers will receive their money back within seven days of the firm going bust, according to the FSCS.

Customers do not need to take any action, as the new deposit protection limit will be applied automatically.

Some account providers operate multiple brands under the same banking licence within the same group, so it’s crucial for people to check whether their provider shares a banking licence with other brands where they hold an account.

“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 banking and finance industry body 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.”

From December 1, an increase in the limit applicable to certain temporary high balance claims will also take effect. This limit covers qualifying life events such as purchasing or selling a property and payouts from insurance policies, and will rise from £1 million to £1.4 million.

The FSCS safeguards temporary high balances for six months from when the funds are credited into an account.

It will continue to collaborate with the PRA and industry partners to promote awareness of the new limit and the “FSCS protected” badge, assisting firms throughout the transition. The existing badge may still be displayed until May 2026, as firms refresh their materials.

The FSCS is financed by a levy on financial firms authorised by the PRA or the Financial Conduct Authority (FCA).