A Welcome Boost to Savings Protection
From 1 December 2025, the financial savings insurance limit will rise to £120,000, offering savers greater peace of mind in an uncertain economic climate. This higher protection threshold means that if your bank or building society fails, more of your hard-earned money is safeguarded under the compensation scheme.
Why This Matters
For many households, savings have grown through a mix of careful budgeting, higher interest rates, and long-term planning for milestones like house deposits, education, or retirement. As balances creep above previous limits, the old cap often left a portion of savings exposed. The new £120,000 level is a recognition of rising living costs and larger average deposits, bringing protection closer in line with real-world financial needs.
What's Protected?
The Financial Services Compensation Scheme (FSCS) protects:
- £120,000 per person, per authorised institution
- Applies to savings accounts, current accounts, and cash ISAs
- Joint accounts are protected up to £240,000 (£120,000 per person)
- Protection is automatic - no need to apply
Should You Spread Your Savings?
Savers should still review how their money is spread across institutions. While the increased limit is generous, it usually applies per person, per authorised institution, so diversifying across banks may still be wise for larger portfolios.
Example Scenario
Sarah has £180,000 in savings:
- £120,000 at Bank A - Fully Protected
- £60,000 at Bank B - Fully Protected
By splitting her savings across two institutions, all £180,000 is covered. If she kept everything at one bank, only £120,000 would be protected.
Important Points to Remember
- Same Banking Group: If you have accounts with multiple brands under the same banking license, the £120,000 limit applies across all of them combined
- Temporary High Balances: If you temporarily have more than £120,000 (e.g., from selling a house), you may be covered for up to £1 million for six months
- Check Your Bank: Make sure your bank or building society is authorised by the Financial Conduct Authority (FCA)
- Foreign Banks: UK branches of foreign banks may have different protection arrangements
What About Investments?
Remember, the £120,000 limit only applies to cash deposits. Investments like stocks, bonds, and funds have separate protection of up to £85,000 per person through the FSCS if your investment firm fails.
The Bottom Line
Overall, the uplift to £120,000 is a welcome development. It strengthens confidence in the banking system, rewards prudent savers, and provides an extra buffer at a time when financial security matters more than ever.
Action Point: Now is the perfect moment to check your balances and ensure you're fully covered. If you have more than £120,000 at a single institution, consider spreading your savings across different banks.