Got savings? Here's why FSCS savings safety protection is important

The Financial Services Compensation Scheme (FSCS) is a statutory compensation scheme set up by the UK Government back in 2001. Broadly speaking, the scheme exists to protect the deposits of savers in the event a particular bank, building society, or credit union goes bust.

Here’s everything you need to know about FSCS savings safety protection.

What does the FSCS cover?

If you’re a saver, FSCS savings safety protection means you can safely save up to £120,000 and not have worry about losing your hard-earned cash. That’s because if your bank or building society goes bust, any savings you had should be returned to you within 7 working days. (Note: the protection limit is now £240,000 for joint accounts).

Aside from savings deposits, the FSCS also covers cash held in a current account, cash ISA, small business account, and guaranteed equity bonds. Cash kept in a self-invested personal pension (SIPP) may also be covered under the FSCS.

Importantly, the protection only applies if your provider has a UK banking licence. While most banks and savings providers offering accounts to UK customers will have a UK banking licence, not all do. The good news is that it’s easy to check whether your money is covered. See the FSCS website for a list of providers that hold a UK banking licence.

FSCS limit increases December 2025

From 1 December 2025, the FSCS deposit protection limit rose from £85,000 to £120,000 per person, per authorised firm. Here are the new limits, applicable in 2026:

Note, the limit for Stocks and Shares ISAs or SIPP platforms remains at £85,000. Also, note that banks and building societies have been given a transition period until May 31, 2026 to update all their physical brochures, branch posters, and website footers—so you may still see reference to the £85,000 limit.

What if your savings exceed the FSCS limit?

When it comes to savings safety, the £120,000 FSCS limit applies to each ‘financial institution’. So, if you have more than £120,000 in savings, it’s wise spread your savings across institutions to avoid putting your cash at risk.

It’s worth noting that some banks share their FSCS protection with others. This is common among sister banks, such as Halifax and Bank of Scotland. Because of this, if you’ve more than £120,000, it’s really important to take note of the banks that share protection. This is so you don’t inadvertently save more than the FSCS limit in one institution.

To see which banks share their protection, you can use the handy tool on the FSCS website.

Why is the FSCS needed?

While the FSCS was introduced back in 2001, it wasn’t really until 2008 that the world woke up to the fact that no financial institution was ‘too big’ to fail. During this challenging economic period the UK Government bailed out Lloyds and Royal Bank of Scotland. Meanwhile, Bradford & Bingley went to the wall during the same year.

Has the FSCS ever been used?

During the 2008 financial crisis, the FSCS was used to pay out £15.65 billion to affected Bradford & Bingley savers.

Who funds the FSCS?

Firms authorised by the Financial Conduct Authority and Prudential Regulation Authority pay a levy which funds the annual cost of running the FSCS. This means that, in theory, taxpayers shouldn’t have to foot the bill should savers need to turn to the FSCS in future.

Is it possible to have more than £120,000 protection?

Yes, it is possible to get more than £120,000 savings safety protection on temporary high balances. That’s because the FSCS can cover deposits up to £1.4 million for six months if you receive a large sum into your bank account following a major life event. For example, you may have a large sum because you’ve sold a property you live in, or you receive a hefty redundancy, or insurance pay out.

This six-month boosted protection starts from the date the large sum hits your account. For more on this extra protection, including what is excluded, take a look at the temporary high balances page on the FSCS website.

Does FSCS savings safety cover investing?

Stocks and Shares ISAs are protected by the Financial Services Compensation Scheme (FSCS), but only if the investment firm or provider goes bust, covering up to £85,000 per person, per firm. It does not protect against investment losses due to market performance. Cash held within the ISA is generally protected up to £85,000.

When investing, always be mindful that your capital is at risk.

Do you have zero protection if your savings are kept in an overseas account?

If you deposit funds in an overseas account - or simply an account that doesn’t have a UK banking licence - you won’t be able to benefit from FSCS savings safety protection.

However, this doesn’t necessarily mean you won’t be protected should your non-UK bank go bust. That’s because there are a number of countries – particularly in Europe – that have their own savings safety schemes.

For example, save in a bank with a French banking licence and you may be covered under France’s national deposit guarantee scheme – ‘Fonds de Garantie des Dépôts’. This protects saver’s deposits up to €100,000. However, dealing with an overseas compensation scheme may not be straightforward. Also, if things go wrong, you’ll be reliant on an overseas Government to help.

Why doesn’t NS&I use the FSCS?

National Savings & Investments (NS&I) is the Government’s own savings provider. If you have an NS&I account, you may notice your funds aren’t protected under the FSCS.

However, this is nothing to worry about. That’s because anything you deposit into a NS&I account is fully backed by HM Treasury. This is the highest level of savings safety protection you can possibly get. In other words, the UK Government guarantees that your savings are safe, even if you have savings in excess of £120,000.

It is for this reason why those with very large savings, or those who don’t wish to spread their savings across multiple institutions, may be particularly attracted to NS&I accounts.

Are challenger banks covered under the FSCS?

There's no hard and fast rule. While well-established challenger banks like Starling, Monzo, and Chase offer full protection, the status of others is evolving. Revolut, for example, reached a major milestone in July 2024 by receiving its UK banking license (with restrictions) and entering a 'mobilisation' phase. As of February 2026, Revolut is still working toward a full, unrestricted license. Crucially, until this phase is complete, your standard Revolut current account balance is not yet protected by the FSCS; instead, your funds are 'safeguarded' in segregated accounts at partner banks. However, if you use Revolut’s 'Savings Vaults,' those specific funds are often held with partner banks like ClearBank and are eligible for FSCS protection.