Savings Guide: FSCS Protection Explained UK — What's Covered, the £120,000 Deposit Limit and How to Claim

The Financial Services Compensation Scheme was established under the Financial Services and Markets Act 2000. It is funded by levies on authorised financial firms — not by the taxpayer — and acts as a safety net of last resort when an FCA or PRA-authoris (fca.org.uk/register)ed firm fails. If your bank, building society, investment platform or insurance company goes bust, FSCS steps in to return your money up to the relevant compensation limit.

FSCS is free to use and you never need to pay to make a claim. Unlike some European deposit guarantee schemes that can take months to pay out, FSCS aims to return eligible deposits within seven working days of a bank failure. For bank and building society deposits, compensation is paid automatically — you don't even need to submit a claim. For investments, pensions and insurance, you'll need to apply through the FSCS online claims portal.

The scheme is overseen by the Financial Conduct Authority (fca.org.uk) (FCA) and the Prudential Regulation Authority (PRA), which set the compensation limits and eligibility rules. It's important to check that any firm you deal with is authorised by the FCA or PRA — you can verify this on the FCA Register at register.fca.org.uk. If a firm is not authorised, FSCS cannot protect you.

Since 1 December 2025, FSCS protects deposits held with UK-authorised banks, building societies and credit unions up to £120,000 per eligible person, per institution. This covers current accounts, savings accounts, cash ISAs, and any other deposit held with an authorised firm.

The protection limit applies per banking licence, not per brand. This is a crucial distinction: some banks operate multiple brands under a single licence. For example, Halifax, Lloyds Bank and Bank of Scotland all share the same banking licence under Lloyds Banking Group — so your total protection across all three is £120,000, not £120,000 per brand. You can check which banking licence a provider operates under using the FSCS protection checker on their website.

Joint accounts receive protection of £120,000 per eligible person, meaning a joint account held by two people is effectively protected up to £240,000. Each person's share is treated separately for FSCS purposes.

Temporary high balances receive enhanced protection of up to £1.4 million for six months from the date the money was deposited. This covers situations where you've received a large sum — such as proceeds from a property sale, a redundancy payment, an inheritance, an insurance payout or a personal injury settlement. After six months, the standard £120,000 limit applies.

FSCS protection extends well beyond bank deposits. If an FCA-authorised investment firm fails, you are protected up to £85,000 per eligible person, per firm. This covers stocks and shares ISAs, investment funds, and other investment products — but only if the firm itself has failed or given bad advice. Normal investment losses from market movements are not covered.

It's important to understand what investment protection means in practice. When you invest through a platform such as Hargreaves Lansdown, AJ Bell or Vanguard, your investments are typically held in a nominee account — legally separate from the platform's own assets. If the platform fails, your investments should be returned to you in full because they were never the platform's property. FSCS investment protection kicks in only if there's a shortfall — for example, if the firm has mismanaged client money or committed fraud.

Pension protection is particularly generous. If your pension provider fails, you are covered for 100% of your claim with no upper limit. However, if your SIPP operator fails, the limit is £85,000 per person. Bad pension advice — such as being advised to transfer out of a defined benefit scheme inappropriately — is also covered up to £85,000.

Insurance protection depends on the type of policy. Compulsory insurance (such as motor third-party cover) and long-term insurance (such as life insurance and annuities) are protected at 100% of the claim. All other general insurance is protected at 90%. If your insurer fails, FSCS will first try to arrange seamless replacement cover with another insurer before paying out compensation.

With the deposit limit at £120,000, most UK savers will find their money is fully protected at a single institution. However, if you have savings above this threshold — or if you're managing money across ISAs, savings accounts and investment platforms — it pays to plan your protection carefully.

The key principle is diversification by banking licence. If you have £200,000 in savings, you could hold £120,000 with one bank and £80,000 with another (under a different banking licence) to ensure full FSCS protection. Remember to check that each provider operates under a separate licence — simply opening accounts with different brand names under the same group won't give you additional protection.

For investors, consider spreading holdings across multiple platforms if your portfolio exceeds £85,000. While nominee account structures mean your investments should be safe even if the platform fails, the £85,000 FSCS limit provides an additional safety net in the unlikely event of fraud or mismanagement. Many UK platforms — including Hargreaves Lansdown, AJ Bell, Interactive Investor and Vanguard — are all separately authorised and provide independent FSCS coverage.

NS&I (National Savings & Investments) products, including Premium Bonds, are backed by HM Treasury rather than FSCS. This means they are protected for 100% of your holdings with no upper limit — making NS&I effectively the safest place to hold cash in the UK, regardless of the amount.

Related reading: Best Fixed Rate Savings Bonds UK March 2026: 4.36% Is Availa.

For more on protecting your savings, see our ISA guide.

If your bank, building society or credit union fails, you don't need to do anything — FSCS will compensate you automatically, typically within seven working days. You'll receive your money directly into an alternative account or by cheque.

For all other types of claim — investments, pensions, insurance, mortgage advice or debt management — you'll need to apply through the FSCS online claims portal at fscs.org.uk. The process is straightforward: you search for the failed firm, confirm your identity, provide details of your claim and upload supporting documents. FSCS aims to make a decision as quickly as possible, though complex investment and pension claims can take several months.

Making a claim is completely free. You should never pay a claims management company to submit an FSCS claim on your behalf — FSCS is a free service and you keep 100% of the compensation you're owed. Be wary of any company that contacts you offering to handle your FSCS claim for a fee, as this is a common tactic used by claims management firms to take a percentage of compensation you could receive in full by claiming directly.

When you accept FSCS compensation, you transfer your legal rights against the failed firm to FSCS. This means you can no longer pursue the firm yourself — FSCS takes over any recovery action. If FSCS recovers additional funds, you may receive a further payment.

This article is for informational purposes only and does not constitute regulated financial advice. Savings rates change frequently — always check the latest rates directly with providers. For personalised advice, consult a qualified financial adviser.

For the latest on protection, visit the FSCS website.