FSCS protection rises: What it means for your savings

The Financial Services Compensation Scheme (FSCS) is increasing its deposit protection limit from £85,000 to £120,000 per person, per authorised firm. This takes effect from Monday, 1 December 2025, and marks the first major uplift in nearly a decade.

For individuals, this is a welcome boost, offering greater security and flexibility. But for businesses, the benefits are more limited. Here’s what you need to know:

What’s changing?

Standard protection:

• Old limit: £85,000
• New limit: £120,000 per person, per authorised firm

Joint accounts:

• Up to £240,000 protection

Temporary high balances:

• Increased to £1.4 million for six months (e.g. following a house sale or inheritance)

Automatic coverage:

• No action required – protection applies to UK authorised banks, building societies and credit unions

Why this matters

For savers:
This is good news. The higher limit means more of your money is protected if your bank fails. It also reduces the need to spread funds across multiple banks just to stay within the old £85,000 cap. It’s a win for simplicity and peace of mind.

For businesses:
Although the increase offers some help, most business deposits are well above the new threshold. Careful cashflow and treasury planning will still be needed to manage risk on larger balances.

Planning points

Check banking licences:
Some banking brands share a licence (e.g. Halifax, Lloyds, Bank of Scotland). The £120,000 limit applies across all accounts held under the same licence.

Joint accounts:
Couples now have protection of up to £240,000 in one bank – useful for shared finances or family savings.

Temporary high balances:
Selling a property or receiving an inheritance? You now have six months of protection up to £1.4 million. Make sure you keep evidence of the source of funds.

Opportunities for savers

Access better rates on larger balances:
With a higher FSCS limit, you may no longer need to split savings across providers. This makes it easier to access premium rates without sacrificing protection.

Use savings platforms:
Platforms like Hargreaves Lansdown’s Active Savings let you access a range of banks in one place – handy if you're managing high balances or want to shop around for better returns.

Consider fixed-term deposits:
If interest rates start to fall, locking in for 6–12 months could help you secure a better rate while still staying protected.

Things to consider for businesses

Corporate deposits:
Most business accounts hold more than £120,000, so the new limit is unlikely to offer full protection. Make sure you're reviewing risk exposure across your banks.

Liquidity strategy:
Now’s a good time to revisit your short-term cash management. Treasury solutions, notice accounts or money market funds may offer security and flexibility while keeping returns in line with your needs.

Key takeaway

The FSCS increase to £120,000 is a step in the right direction for savers and couples, giving them more confidence and simpler ways to manage cash. But businesses will still need to actively manage deposits to stay protected and maintain access to funds.

Action points

• Review your savings or reserves across all institutions.
• Check whether your accounts are held under the same banking licence.
• Make use of the new £120,000 limit to simplify your savings strategy.
• Use temporary high balance protection wisely – and keep the paperwork.

Need help?

We can help you assess your cash position, spot risks and explore savings or investment opportunities within your FSCS protection. Get in touch with your usual Larking Gowen contact or email enquiry@larking-gowen.co.uk

James Rix