Millions of UK savers could soon see a greater portion of their bank deposits guaranteed, as regulators finalise plans to raise the FSCS protection threshold from £85,000 to £110,000 per person.
The Prudential Regulation Authority (PRA), part of the Bank of England, has confirmed it will implement the proposed increase following a public consultation that ended in June. The move marks the first major revision to the scheme since the financial crisis over 15 years ago.
Rise Aims to Reflect Inflation and Strengthen Public Confidence
The PRA said the increase was designed to keep pace with long-term inflation and to support confidence in the UK financial system. As Deputy Governor Sam Woods noted in a statement, “Confidence in our financial system is an essential foundation for economic growth.” He added that the higher limit will ensure that more savers can trust their deposits are safe, even in the event of a bank collapse.
Under the current rules, the FSCS guarantees up to £85,000 of an individual’s savings held with any one FCA or PRA-regulated institution. The proposed change, set to take effect from 1 December 2025, would see this cap lifted to £110,000.
The update comes in the wake of market turbulence in 2023, including the failure of Silicon Valley Bank UK Ltd, which, although it did not trigger a payout, highlighted vulnerabilities in the financial system. According to the PRA, the events underlined the need for “robust depositor protection” as a core part of the UK’s regulatory framework.
FSCS Compensation Remains Automatic for Most Savers
For the majority of savers, FSCS protection works automatically. If a bank, building society or credit union fails, eligible individuals are reimbursed without needing to file a claim, provided the firm is authorised by the PRA or Financial Conduct Authority (FCA).
The FSCS is funded by a levy on all regulated financial firms, not by taxpayers. According to its latest figures, the scheme paid out £10.1 million over the past three years, largely tied to small credit union failures. The new threshold could protect more customers should larger institutions face insolvency in the future.
The proposed increase applies to eligible deposits such as current accounts, savings, and cash ISAs held with UK-authorised banks, building societies, or credit unions. According to the Bank of England, the compensation limit applies per person, per authorised institution, not per account or banking brand.
Customers who hold accounts with different banks under the same banking licence would still be covered only up to £85,000 (or £110,000 once the change takes effect) across all accounts combined. The FSCS advises savers to check which firms share a licence using the Financial Services Register or the Bank of England’s list of banking brands.
