The PRA has announced its proposal to increase the Financial Services Compensation Scheme (FSCS) deposit protection limit from £85,000 to £110,000.
This update, the first since 2017, is designed to bolster consumer confidence and safeguard their funds against the potential failure of UK-authorised financial institutions such as banks, building societies, and credit unions. This revised limit is set to be implemented for institutions that fail from 1 December 2025.
Sam Woods, deputy governor for Prudential Regulation and CEO of the PRA, emphasized the importance of this proposal in strengthening the public’s trust in the financial sector. “Confidence in our financial system is an essential foundation for economic growth. We want to support confidence in our banks, building societies and credit unions by raising the amount that people can keep in their account which is covered by the deposit guarantee scheme to £110,000 per person, so all that money is safe even if the firm fails,” he stated.
Martyn Beauchamp, CEO of the FSCS, highlighted the role of the FSCS in fostering trust among consumers. “Depositor protection is what FSCS is best known for, as it covers the money held in our day-to-day current accounts and savings. Consumers tell us that the existence of FSCS protection is a key driver of their trust in financial services, and this trust is in turn a critical component of stability and growth. It’s important that FSCS’s limit is reviewed to ensure it stays appropriate and relevant,” he remarked.
Additionally, the PRA’s proposal includes enhancing protection limits for certain temporary high balance claims, such as those related to life events or insurance payouts, from £1m to £1.4m effective from the same date.
Rocio Concha, Which? Director of Policy and Advocacy, supported the increase, stating: “Raising the deposit protection limit is a sensible decision to support consumer confidence in the financial service industry. At a time when the government and regulators are going for growth, this decision is a reminder that strong consumer protections and economic growth go hand in hand.”
Eric Leenders, managing director for Personal Finance at UK Finance, also commented on the revision. “The FSCS provides depositors with valuable protection and underpins confidence in the UK’s financial system. The current limit of £85,000 was set back in 2017 and so it makes sense to review it. We look forward to working with the Prudential Regulation Authority as part of their consultation into the wider FSCS deposit protection system,” he said.
This proposal is part of a broader consultation on deposit protection by the FSCS, which also considers introducing new rules associated with the Banking Resolution (Recapitalisation) Bill, aiming to enhance the resilience of the financial sector.
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