The Financial Services Compensation Scheme (FSCS) protects your money when a UK-authorised bank, building society, or credit union fails and can’t repay what it owes customers.
From 1 December 2025, the deposit protection limit rose from £85,000 to £120,000 per eligible person, per authorised firm, the first increase since 2017. This covers current accounts, savings accounts, cash ISAs, and fixed-rate bonds.
It’s worth being precise about what this £120,000 figure covers. It applies to deposit-type products (current accounts, savings accounts, cash ISAs, and fixed-rate bonds) held with a bank, building society, or credit union. It does not apply to investment-type products, such as Stocks & Shares ISAs or general investment accounts held with a broker or investment firm. These remain protected up to £85,000, under separate FCA rules that weren’t part of this change.
How the “per firm” limit works
The £120,000 limit applies per person, per authorised firm, not per account, and not per product. If you hold £70,000 in a savings account and £60,000 in a Cash ISA with the same bank, you’re covered up to £120,000 combined, not £190,000.
This matters because some banking brands you might assume are separate actually share a single authorisation. For example, Halifax and Bank of Scotland operate under one licence, as do NatWest and Royal Bank of Scotland. Money held across “different” brands under the same licence is combined for FSCS purposes. You can check how a specific provider is structured using the FSCS’s official bank and savings protection checker.
Joint accounts and temporary high balances
Joint accounts are protected up to £120,000 per named account holder, so a two-person joint account is covered up to £240,000 in total.
There’s also separate, temporary protection for large one-off sums, such as proceeds from a house sale, an inheritance, or an insurance payout, known as temporary high balances. These are protected up to £1.4 million for up to six months from the date the balance was received.
How compensation is paid
For most straightforward claims, the FSCS pays compensation automatically, without you needing to apply, using records from the failed firm to identify and repay depositors directly. According to the FSCS, this typically happens within seven working days of the firm failing. More complex cases, including temporary high balance claims, or situations where the beneficial owner of funds isn’t clear (such as money held in trust), can take longer, up to three months.
Has this ever actually happened?
Yes, and not just in theory. FSCS deposit protection has been tested at real scale.
The largest case was during the 2008 financial crisis, when five UK banks failed within a short period. FSCS payments totalled roughly £20 billion, protecting around 4 million accounts. The biggest single case was Bradford & Bingley, at approximately £15.65 billion, though this was largely handled by transferring customer accounts to Santander over a weekend, with government coordination, rather than individual claims. Icesave, an Icelandic bank operating in the UK, is often cited as the most prominent case where FSCS paid compensation directly to consumers.
More recently, failures have been much smaller in scale but continue to occur: between 2021 and 2024, FSCS dealt with 11 credit unions and one small bank going into default, paying out around £10 million in deposit claims. In the 2024/25 financial year, FSCS paid out £327 million in total compensation across all categories (deposits, investments, pensions, and insurance combined) to around 32,600 people.
Since its creation in 2001, FSCS has paid out more than £26 billion in total and compensated over 6.5 million people.
Key points
- Deposit protection limit: £120,000 per person, per authorised firm (up from £85,000, effective 1 December 2025)
- Investment protection limit: unchanged at £85,000, applies to Stocks & Shares ISAs and other investment accounts, not deposits
- Joint accounts: protected up to £120,000 per account holder
- Temporary high balances: protected up to £1.4 million for six months
- Typical payout timeline: within seven working days for standard claims
- Check before assuming separate cover: some banking brands share a single licence, use the official FSCS checker to confirm
- Track record: FSCS has paid out over £26 billion since 2001, including roughly £20 billion during the 2008 crisis alone