Under new proposals from the Bank of England, UK savers could soon receive more protection for their money if their bank or building society collapses.
The Bank’s regulatory arm, the Prudential Regulation Authority (PRA), has proposed raising the Financial Services Compensation Scheme (FSCS) protection limit from £85,000 to £110,000. This 30% increase is intended to account for inflation and would be the first significant update since the 2008 banking crisis.
The FSCS covers eligible savings held with UK-authorised banks, building societies and credit unions. It protects individual customers and most small businesses if a financial institution fails.
The current £85,000 cap was introduced in 2010 after the financial crisis when a series of UK banks faced collapse. Before that, protection was far lower – in 2007, only the first £2,000 of savings were fully covered, with 90% of the next £33,000 repaid.
The cap was temporarily reduced to £75,000 in 2015 to align with EU rules but restored to £85,000 in 2017.
The PRA has opened a consultation on the proposed increase to implement the new £110,000 cap from 1 December 2025.
The debate around deposit protection was reignited during the 2023 mini-banking crisis when collapses, including Silicon Valley Bank, raised concerns that UK startups and small firms were more exposed than their US counterparts, where savings are protected up to £193,000.
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