Customers of UK banks and building societies will soon benefit from a major increase to the amount of money protected if their bank fails, after regulators confirmed that the Financial Services Compensation Scheme (FSCS) deposit limit will rise from £85,000 to £120,000.
The change, announced by the Prudential Regulation Authority (PRA), marks the largest uplift since 2017 and reflects updated inflation data and industry feedback. It will take effect in December, with customers automatically covered — no action is required from account holders.
Martyn Beauchamp, chief executive of the FSCS, said the increase will give consumers stronger reassurance at a time of economic uncertainty.
“This rise ensures that consumers can feel confident their money is safe, from the very first penny up to £120,000,” he said.
The FSCS protects deposits per person, per authorised firm, meaning multiple accounts held under the same banking licence share the £120,000 limit. Several major banks operate multiple brands under a single licence — a detail the PRA encourages consumers to check.
Sam Woods, deputy governor for prudential regulation at the Bank of England and CEO of the PRA, said the reform strengthens financial stability and public confidence.
“This change will help maintain the public’s confidence in the safety of their money,” he said. “Depositors will be protected up to £120,000 should their bank, building society or credit union fail.”
Consumer groups welcomed the move. Which? described it as a “sensible decision” that reinforces trust in the financial services sector without restricting economic growth. Rocio Concha, the group’s director of policy and advocacy, said the increase was “a timely reminder that strong consumer protections need not hamper those aims.”
Industry representatives also backed the decision. Eric Leenders, managing director of personal finance at UK Finance, said adjusting the limit for inflation was “right” and that the sector would work with regulators to ensure smooth implementation.
As part of the same update, the PRA confirmed a rise in the temporary high balance cap — which protects large sums resulting from major life events such as house sales, inheritances or insurance payouts. That limit will increase from £1 million to £1.4 million, and will apply for six months from the point the balance enters the account.
The FSCS is funded through a levy on PRA- and FCA-regulated firms, rather than taxpayers.
