Savers in the UK could benefit from an increase in the deposit protection limit from £85,000 to £110,000 later this year, as part of proposals currently under consultation by the Bank of England’s Prudential Regulation Authority (PRA).
Under the proposed changes, the Financial Services Compensation Scheme (FSCS), which provides protection for savers in the event of a bank, building society, or credit union failure, would increase its protection limit to offer greater security for consumers. The FSCS acts as a safety net for those who find themselves unable to retrieve their funds after a financial institution goes bust, stepping in to pay compensation when a firm becomes insolvent.
The current £85,000 protection limit has been in place since 2017, and the proposed increase takes inflation into account, helping to ensure that the value of the protection remains relevant in the face of rising living costs. The PRA has stressed that the move is designed to boost consumer confidence in the financial system, reassuring savers that their money will remain safe even in the event of a bank or building society collapse.
Sam Woods, Deputy Governor for Prudential Regulation and Chief Executive of the PRA, commented, “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.”
Martyn Beauchamp, Chief Executive of the FSCS, echoed these sentiments, saying that depositor protection was a key factor in consumer trust. “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,” Beauchamp said. He also noted that it was important to review the FSCS’s protection limits to ensure they remained relevant and appropriate.
Rocio Concha, Director of Policy and Advocacy at consumer watchdog Which?, welcomed the proposal, calling it a “sensible decision” that would help support consumer confidence in the financial services industry. She added, “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.”
The increase in the protection limit is just one element of a wider consultation on FSCS deposit protection. Other proposals under review include raising the limit for certain temporary high-balance claims—typically associated with significant life events such as buying or selling a house or insurance payouts—from £1 million to £1.4 million. This change could also take effect from December 1, 2025.
The PRA has outlined that any changes to the deposit protection limit would come into force for firms failing from December 1, 2025. However, the public consultation on these proposals will continue until June 30, 2025, and the PRA is expected to confirm the outcome of the consultation in November 2025, with approval for any changes needing to be granted by the Treasury.
While the £110,000 protection limit would significantly increase the security offered to savers, those with larger balances can still protect their deposits by spreading funds across different financial institutions, as the limit applies on a per-person, per-firm basis.
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Industry experts are largely in favour of the proposals, including Eric Leenders, Managing Director for Personal Finance at UK Finance, who described the FSCS protection as a “valuable safety net” for depositors. “The current limit of £85,000 was set back in 2017, and it makes sense to review it,” Leenders added. “We look forward to working with the Prudential Regulation Authority as part of their consultation into the wider FSCS deposit protection system.”
Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, emphasised the importance of savers checking which group their bank belongs to and ensuring that there are no overlaps in coverage. “It’s vital to check which group your bank belongs to, and whether there are any overlaps,” Coles warned.
Robin Fieth, Chief Executive of the Building Societies Association, also welcomed the consultation, stating, “Deposit protection is a crucial underpin for saver confidence, so it is important that it at least keeps pace with inflation.”
If implemented, the increase in the protection limit will offer greater security for savers, helping them feel more confident about keeping their money in UK-authorised financial institutions.
