Proposed Increase in Deposit Protection Limit
In a significant update for UK savers, the Prudential Regulation Authority (PRA) has today proposed an increase to the deposit protection limit under the Financial Services Compensation Scheme (FSCS), raising it from £85,000 to £110,000.
The FSCS currently protects 100% of the first £85,000 held by an individual, per UK-regulated financial institution (not per account). Joint accounts are eligible for FSCS protection up to the same limit of £85,000 per eligible person.
The FSCS only applies to organisations regulated by the Financial Conduct Authority, with the main categories of protected savings including:
- Current accounts
- Savings accounts (including sharia accounts)
- Cash ISAs (including cash Lifetime ISAs & Help to Buy ISAs)
- Small business accounts
- Cash saved within a SIPP (Self Invested Personal Pension)
The proposed increase aims to reflect the level of inflation since the limit was last changed in 2017, offering even greater reassurance to consumers that their savings are safe should their bank, building society, or credit union face financial difficulties.
The new limit, if approved, would apply to any financial institution that fails after 1st December 2025.
What happens next?
The PRA has opened a consultation on the proposed changes today, and they are seeking responses from the public and stakeholders until 30 June. After reviewing feedback, the PRA expects to announce the outcome of the consultation in November, with any changes to the deposit protection limit requiring approval from HM Treasury.
If you have any questions about this, please do not hesitate to get in touch with a member of the team.