The UK Prudential Regulation Authority (PRA) has proposed to raise the deposit protection limit of the Financial Services Compensation Scheme (FSCS) from £85,000 to £110,000.
The deposit protection limit – which represents the maximum amount of money the FSCS typically protects should a depositor’s bank, building society or credit union become insolvent – has been set at £85,000 since 2017.
The proposed increase takes into account inflation since the limit was last changed, and is designed to give consumers confidence that their money is safe if their UK-authorised bank, building society or credit union fails. If taken forward, the new limit would apply to firms that fail from 1 December 2025.
The FSCS, established in 2001, has paid compensation of £10.1 million to depositors in the past three full financial years, primarily in relation to small credit union failures. Since it was established, the FSCS has paid over £20 billion, primarily in relation to deposit failures during the 2008 financial crisis.
The proposal comes as part of a wide-ranging consultation on deposit protection provided by the FSCS. Other proposals include:
- An increase in the limit applicable to certain temporary high balance claims – used for qualifying life events like buying or selling a house and payouts from insurance policies – from £1 million to £1.4 million, with effect from 1 December 2025.
- Introducing rules needed to facilitate the Bank Resolution (Recapitalisation) Bill, which proposes a new resolution tool enabling industry funds provided via the FSCS to be used to recapitalise a failing firm to support its sale or transfer to a bridge bank. The PRA proposes to make these rules once the relevant provisions in the Banking Resolution (Recapitalisation) Bill have been enacted and brought into force.
Responses to the consultation are requested by 30 June 2025.
