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You might assume that any cash savings you hold in a UK-regulated bank, building society, or credit union are safe, and as such, they’ll be there when you need them.
While this is largely true, financial institutions can and do fail. Indeed, five collapsed in the middle of the 2008 financial crisis. According to a press release from the Financial Services Compensation Scheme (FSCS), these failures affected over 4.08 million retail bank accounts in the UK.
The FSCS’s deposit protection scheme was pivotal in shielding the customers of those banks from financial loss.
So, even if you’re not aware of this scheme, the decision to increase the deposit protection limit from £85,000 to £120,000 in December 2025 is good news for savers.
Keep reading to learn more about the scheme and discover three practical tips for keeping your cash savings safe.
The deposit protection scheme gives savers confidence that their money is safe
The FSCS is an independent, free-of-charge service that was set up by the government. It provides compensation to customers of financial institutions that go out of business.
If you hold money in a UK-authorised bank, building society, or credit union that fails, the FSCS will compensate you up to the “deposit protection limit”. This includes deposits in:
- Current accounts
- Savings accounts
- Savings bonds
- Cash ISAs.
There’s no need to submit a claim – the FSCS will compensate you automatically.
You can now receive up to £120,000 if your financial institution fails
Previously, the deposit protection limit was £85,000 per person, per authorised institution. However, the FSCS increased this limit to £120,000 from 1 December 2025.
This is higher than the earlier proposal of £110,000 by the Prudential Regulation Authority (PRA), which supervises UK banks, due in part to persistently higher inflation rates.
As the limit applies per person, if you have a joint account, each account holder is protected up to £120,000. So, a couple could receive up to £240,000 in compensation. However, this is not an additional allowance – if you have an individual account and a joint account with the same institution, the £120,000 limit covers both.
The FSCS also increased the Temporary High Balance (THB) amount from £1 million to £1.4 million from 1 December 2025.
You may be entitled to this enhanced cover if your balance is higher than usual due to a major life event, such as selling your home or receiving an inheritance. This compensation is only available for up to six months from when you received the money.
3 practical ways to keep your savings safe
If you want to make sure your cash savings are covered by the deposit protection scheme, here are a few steps to take now:
1. Check your bank is covered by the scheme
It’s important to note that not all financial institutions are covered by the FSCS’s compensation scheme, only those authorised by the PRA and the Financial Conduct Authority (FCA).
While most banks, building societies, and credit unions are included in the scheme, some platforms and e-money firms aren’t. As such, it’s crucial that you check your specific provider using the FSCS’s bank and savings protection checker to make sure your savings are protected.
By May 2026, a new badge will be added to the website, apps, and branches of FSCS-protected firms, making it easier to identify institutions that are covered by the scheme.
2. Find out if your bank shares protection with another financial institution
If you have accounts with several providers that are part of the same banking group (and share a banking licence), the FSCS will treat them as one bank. This means that the £120,000 deposit protection limit applies to the total amount you hold across all these accounts – not each separate account.
For example, Halifax and Bank of Scotland are part of the Lloyds Banking Group and share protection. So, if you have cash savings with both of these banks, your protection limit will be £120,000 in total.
Search the Financial Services Register on the FCA’s website to see which banks share a licence or check the lists of banking and building society brands that share FSCS protection on the Bank of England’s website.
3. Spread your cash savings across different providers
If you have more than £120,000 in total with one provider, consider spreading your money across different providers that don’t share a banking licence. This way, in the unlikely event that your provider or providers fail, you could benefit from the full deposit protection cover for each account you hold.
When managing large savings, it’s wise to speak to a financial planner who can advise you on how best to manage your money across multiple accounts to mitigate risk.
Get in touch
If you’re concerned about how to keep your cash savings safe, and would like advice on how to mitigate risk, we can help.
To learn more, please email hello@sovereign-ifa.co.uk or call us on 01454 416653.
Please note
This article is for general information only and does not constitute advice. The information is aimed at retail clients only.
All information is correct at the time of writing and is subject to change in the future.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.
Approved by Best Practice IFA Group Ltd on 23/12/15