The Prudential Regulation Authority has set out plans to raise the deposit protection limit of the Financial Services Compensation Scheme to £110,000 from £85,000.  

The current limit – which represents the maximum amount of money the Financial Services Compensation Scheme typically protects should a depositor’s bank, building society or credit union become insolvent – has not been changed since 2017. 

The Bank of England body says: “The proposed increase takes into account inflation since the limit was last changed, and is designed to give consumers confidence that their money is safe if their UK-authorised bank, building society or credit union fails.  

If taken forward, the new limit would apply to firms that fail from 1 December 2025. 

Prudential Regulation Authority chief executive Sam Woods says: “Confidence in our financial system is an essential foundation for economic growth.  

“We want to support confidence in our banks, building societies and credit unions by raising the amount that people can keep in their account which is covered by the deposit guarantee scheme to £110,000 per person, so all that money is safe even if the firm fails.” 

Financial Services Compensation Scheme chief executive Martyn Beauchamp adds: “Consumers tell us that the existence of FSCS protection is a key driver of their trust in financial services, and this trust is in turn a critical component of stability and growth.  

“It’s important that FSCS’s limit is reviewed to ensure it stays appropriate and relevant.” 

Which? director of policy and advocacy Rocio Concha points out: “Raising the deposit protection limit is a sensible decision to support consumer confidence in the financial service industry.  

“At a time when the government and regulators are going for growth, this decision is a reminder that strong consumer protections and economic growth go hand in hand.” 

UK Finance managing director for personal finance Eric Leenders says: “The FSCS provides depositors with valuable protection and underpins confidence in the UK’s financial system.  

“We look forward to working with the Prudential Regulation Authority as part of their consultation into the wider FSCS deposit protection system.” 

The Financial Services Compensation Scheme, established in 2001, has paid compensation of £10.1m to depositors in the past three full financial years, primarily due to small credit union failures.  

Since it was established, the body has paid over £20bn, mainly as a result of deposit failures during the 2008 financial crisis.