The Prudential Regulation Authority (PRA) is considering an increase in the Financial Services Compensation Scheme (FSCS) deposit protection limit, raising it from £85,000 to £110,000.
This limit, which indicates the maximum sum protected in the event of a bank, building society, or credit union insolvency, has remained unchanged since 2017. The proposed adjustment reflects inflationary trends since the last revision, and if approved, will be implemented for institutions that fail on or after December 1, 2025.
Sam Woods, the PRA’s deputy governor for prudential regulation and CEO, emphasized the importance of fostering confidence in the financial system as a catalyst for economic growth. He stated, “To bolster public trust in our banks, building societies, and credit unions, we propose raising the insured limit to £110,000 per person, ensuring that all funds remain secure even if the institution fails.”
Since its inception in 2001, the FSCS has compensated depositors with payments totaling £10.1 million over the last three financial years, primarily due to the failure of small credit unions. Overall, the FSCS has disbursed more than £20 billion, largely addressing deposit failures linked to the financial crisis of 2008.
Rocio Concha, the director of policy and advocacy at Which?, noted the significance of this proposed increase. She remarked, “Raising the deposit protection limit is a prudent move to bolster consumer confidence in the financial services sector. As the government and regulators focus on fostering growth, it is essential to remember that robust consumer protections are integral to a thriving economy.”
This proposal is part of a broader consultation on deposit protections administered by the FSCS. Additionally, it includes plans to raise the limit on certain temporary high balance claims—used for significant transactions, such as property purchases and insurance payouts—from £1 million to £1.4 million, effective December 1, 2025.
The PRA is also exploring the possibility of rerouting funds from the FSCS to stabilize a failing bank, facilitating its sale or transfer to a bridge institution.