From 1 December 2025, should any regulated UK bank go out of business and you have money in an account with the firm, you will be able to claim back a maximum of £110,000.
The Prudential Regulation Authority (PRA) has proposed that the limit should rise from its current £85,000 level, the Bank of England has announced.
This is due to inflation since its last raise in 2017, but the rule still needs to pass in Parliament, which the PRA expects to be completed by November this year.
In the last three financial years, the FSCS has paid £10.1m to customers who have lost deposits to defunct firms, according to the Bank of England’s data.
Most of the compensation from the FSCS is in relation to small credit union failures. In total, the deposit protection scheme has paid £20bn to customers since 2001, although the majority of this is due to deposit failures during the 2008 financial crisis.
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Sam Woods, deputy governor for prudential regulation, said: “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.”
‘A sensible decision’
Rocio Concha, Which?’s director of policy and advocacy, said: “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… January economic growth go hand in hand.”
As well as the repayments rising for banking failures, there will also be a boost to temporary high balance claims, which cover buying and selling a house and insurance policy payouts.
The limit for those transactions you can claim back will be £1.4m, up from the current £1m bar.
Robin Fieth, chief executive of the Building Societies Association (BSA), said: “We welcome the consultation on increasing the FSCS limit and the commitment to review it every five years going forward, points [that] the BSA has supported for a number of years.
“Deposit protection is a crucial underpin for saver confidence, so it is important that it at least keeps pace with inflation.”
