FSCS – A Positive Change for Savers: What You Need to Know

There’s a quiet but meaningful change from December that gives savers a little more breathing room.

From 1 December 2025, the amount of money protected in UK banks, building societies and credit unions under the Financial Services Compensation Scheme (FSCS) rises from £85,000 to £120,000 per person, per authorised institution.

This change is particularly relevant if you hold larger cash balances, manage multiple accounts for protection reasons, or are expecting a significant lump sum from a life event, and for many of our clients it’s a useful shift that simplifies life and reduces a bit of unnecessary admin.

Here’s how it works in practice — and why it matters.

What’s Changing?

1. Higher protection for everyday deposits

If your bank or building society fails on or after 1 December 2025, up to £120,000 per person, per authorised institution will be automatically protected. There’s no need to apply or register — compensation is paid if required.

2. Higher temporary high balance protection

For large sums arising from a qualifying life event, such as selling your home, receiving an inheritance, insurance payouts, or redundancy payments, temporary high balance (THB) protection rises from £1 million to £1.4 million for six months. This gives you space to make decisions without pressure.

3. Protection is per firm, not per account

If you hold accounts at two brands that share the same banking licence, your total protection is still limited to the FSCS threshold for that licence. Different institutions with separate licences enjoy separate allowances.

Why the Change?

The old limit was set almost a decade ago. With rising house prices, pensions and savings balances increasing over time, regulators felt it no longer reflected the real world.

This update aims to keep confidence high and ensure people feel secure holding money in UK institutions.

Why It Matters for You

If your deposits total between £85,000 and £120,000 with a single institution, your full balance is now protected. This means fewer accounts may be needed purely for FSCS protection, meaning less need to split accounts and less paperwork.

And if you happen to be sitting on a large balance after a life event, that temporary protection of up to £1.4m buys peace of mind while decisions are made.

A Few Things Still Worth Checking

Even with the higher limit, a couple of checkpoints remain helpful:

• Brand vs licence: different logos don’t always mean separate cover. Protection applies per authorised firm, not per account. Two brands under one licence share the same limit. As an example, if you have separate accounts with Barclays and Tesco bank, you’ll only be covered for one limit as Tesco Bank is a trading name of Barclays. There are numerous other examples so it pays to double-check. You can find a list of banking brands that share a licence on the Bank of England website here.
• Timing: the new limit only applies to failures from 1 December 2025 onwards.
• Product type: Only eligible deposits are covered. Investment accounts remain protected up to £85,000 unless otherwise specified.

What You Might Want to Do

You don’t have to act — but you might choose to:

• Review whether you’re holding more accounts than you really need.
• Check if the brands you use sit under one licence or several.
• If you’re expecting a large payment, plan timing to benefit from temporary high balance protection.
• Continue to consider the overall risk profile of your institutions: keep an eye on interest rates and financial strength — FSCS is a safety net, not a substitute for good decision-making.

If you’d like guidance on how this change affects your cash holdings or overall financial plan, we’re happy to review your strategy with you.

How This Supports Your Financial Planning

At Chesterton House, our goal is to get your entire financial house in order. That includes deposits, cash holdings, emergency funds, and liquidity.

The FSCS increase simplifies one piece of that picture. It allows us to spend less time worrying about splitting deposits and more time on what you want your money to do — grow, protect, and be available for the opportunities that matter most.

In Summary

• FSCS deposit protection increases from £85,000 to £120,000 per person, per authorised institution from 1st December 2025.
• Temporary high balance protection rises to £1.4m for qualifying life events.
• The change offers extra reassurance and flexibility, but it still pays to check how banks are licensed and how your accounts are structured.
• You don’t need to do anything to benefit — but reviewing your position may make life simpler.

If you’d like help reviewing how this affects your savings, just let us know. We’d be happy to walk through it with you.

 

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FAQs

Do I need to register for this new protection?

No. It applies automatically if an authorised institution fails.

Does this cover all types of accounts?

It applies to eligible cash deposits. Investment products are protected separately, typically up to £85,000.

What is “temporary high balance” protection?

It covers up to £1.4m for six months after major life events like selling your main home or receiving inheritance.

If I bank with two brands, do I get double the allowance?

Not always. Some brands share one banking licence, meaning one shared allowance.

If I already split my savings, should I consolidate?

Possibly — but licence structure, access needs and interest rates still matter. We can help assess what fits best.

Is this something I need to act on quickly?

No. The protection changes automatically in December 2025. It’s worth reviewing, but there’s no urgency.