What does the FSCS deposit limit increase mean for you?
While the Autumn Budget has managed to leave a bitter taste in the mouth of many business owners and individuals, some solace can be found in the sanctity of long-term money security.
From 1 December 2025, UK bank customers will benefit from a significant uplift in the deposit protection limit under the Financial Services Compensation Scheme (FSCS).
Following confirmation by the Prudential Regulation Authority (PRA), the FSCS will begin protecting up to £120,000 of a depositor’s money, up from the previous limit of £85,000.
This will be useful in the event that the bank, building society or credit union experiences a critical failure and helps keep your money safe.
To make the most of the new limit, it is best to understand the reasons behind the change and how this may impact the way that money is saved going forward.
Why has the FSCS deposit limit changed?
The main reason behind the change is due to the ongoing impact of inflation.
It is positive that the PRA are making changes to better accommodate the real value of the funds people rely on and is adjusting thresholds accordingly.
The changing thresholds also serve to reflect a broader change in approach to the modernisation of regulatory frameworks.
We can expect to see further changes to the protection limit in the future if inflation continues to rise, as the PRA remains committed to keeping pace with shifting market dynamics.
What do the changes mean for you?
While banks and financial institutions rarely collapse, it is not impossible for them to do so.
Should that ever happen again, depositors can rest assured that they will receive compensation for deposits of up to £120,000.
You can feel more confident in committing to savings knowing that an additional safety net exists to keep the money safe.
The rise in the FSCS limit also includes an increase in the protection available for temporary high balances, which typically apply in life event scenarios such as purchasing a property or receiving insurance payouts.
There will be an increase from £1 million to £1.4 million for the temporary high balance protection limit, which should ensure that for individuals undergoing significant financial transitions also feel more secure.
As the increase to the FSCS deposit protection limit is part of a series of regulatory updates aimed at keeping the UK financial sector fit for future use, it is vital you understand the impact this will have on you.
Our expert team can help you to know your rights and protections and can also help you to approach your financial situation with greater confidence than before.
The Autumn Budget has resulted in most people reflecting on their finances, so let us help you to prepare for the coming months and years of change.
Speak to our team today to find out how to protect your financial future.
