How is your cash protected and what are the new limits?
01 December 2025Keeping an eye on your money is important. You will appreciate that we are advocates of this, along with keeping your money safe if a financial institution has a problem. But how is your money protected if it is held in an authorised bank or building society?
It was good to hear in mid-November 2025 that the deposit protection limit – the amount of money that is protected if a bank or building society fails – is increasing significantly.
The deposit protection scheme is part of the Financial Services Compensation Scheme (FSCS) and further details may be found here: https://www.fscs.org.uk/industry-resources/deposit-protection-banks/
From 01 December 2025, the deposit protection limit will rise from £85,000 to £120,000 per person, per UK authorised deposit taker. This is the biggest increase since 2017, and is higher than the proposed £110,000, reflecting both the inflation environment and feedback from detailed consultations.
The increase is certainly good news for consumers. However, there are some important points to bear in mind, and we have touched on a few below, which we hope will be helpful.
How does the protection apply?
It’s important to remember that the protection applies per individual, per authorised firm/deposit taker. Some banking groups operate a range of brand names under one licence. In this case, the deposit protection limit would cover the total amount of cash held across those brands. As an example, HSBC and first direct share a banking licence.
What about joint accounts?
For an account in joint names, the same limit applies per individual, and therefore a joint account balance could be protected up to £240,000 under the new limit.
Is protection for temporary high balances increasing too?
Yes, it is, from 01 December 2025, in line with the change to the deposit protection limit. Protection for temporary high balances (to cover significant life events such as selling a house or receiving an inheritance) will rise from £1M to £1.4M.
The protection lasts for six months if certain requirements are met. More here: https://www.fscs.org.uk/making-a-claim/claims-process/temporary-high-balances/
How do I check if my money is protected?
The FSCS provides a helpful protection checker, which displays all firms linked to the same Firm Reference Number, including trading names and subsidiaries. Have a look here: https://www.fscs.org.uk/check/check-your-money-is-protected/#
As noted above, some banks / building societies share a banking licence over a number of brands, and this could affect how much of your money is covered. You can check whether this applies to your savings by adding all your accounts to the FSCS checker.
Remember, if an offered return looks too good to be true, this is usually the case, so be careful when selecting where you hold your funds and do your checks first.
What if my cash holdings are higher than the deposit protection limit?
Another option for cash holdings is National Savings & Investments (NS&I), the UK government savings bank. NS&I is backed by HM Treasury, and the deposit protection limit doesn’t apply – savings are protected up to the maximum allowed investment into NS&I products (as examples, £2M into the Direct Saver account, £1M each into a range of fixed-rate and easy access bonds). Further details may be found here: https://www.nsandi.com/products
Summary
Do keep your cash holdings under review, both to ensure that you are receiving a reasonable return on your savings and to identify any accounts which might be over the new deposit protection limit or not protected at all.
If you are thinking of switching funds between accounts, be careful to check first that no penalty applies (for example, for moving funds before the end of a fixed term).
No individual advice is provided during the course of this blog.
Vicky Fulcher
Director
CFPTM Chartered MCSI
Chapters Financial Limited is authorised and regulated by the Financial Conduct Authority, number 402899
