The UK government protects savers through the Financial Services Compensation Scheme (FSCS). This deposit guarantee scheme is designed to safeguard individuals, small businesses, charities, and even credit unions if a bank or building society fails. It plays a vital role in financial stability, ensuring your money is protected and giving you peace of mind.

How the Deposit Guarantee Scheme Works

The FSCS covers deposits of up to £85,000 per person, per authorised credit institution.

• For joint accounts, the protection doubles to £170,000, because each person is covered individually.
• This means that if your bank or building society is unable to meet obligations, your funds up to these limits are safe.

This protection applies to current accounts, savings accounts, ISAs, and certain fixed-term deposits.

Temporary High Balances

Sometimes you may hold more than £85,000 for a short period. The FSCS provides extra protection of up to £1 million for six months in special cases, including:

• Selling a property and receiving the sale proceeds
• Receiving an inheritance
• Large insurance or compensation payments

This temporary protection ensures you don’t lose out during significant life events when your deposits may be unusually high.

Eligibility and Coverage Across Credit Institutions

Not every account is automatically covered. To be protected, your account must be held at a UK-authorised credit institution regulated by the Prudential Regulation Authority (PRA).

Important points to remember:

• Many banks and credit unions share the same authorisation, so spreading your money between them does not always increase protection.
• Check your bank’s status on the FSCS website to confirm coverage.

Beyond Protecting Deposits

The FSCS does more than just cover deposit guarantee claims. It can also support consumers in cases involving:

• Investments
• Insurance
• Pensions

Each type of protection has its own limits, conditions, and eligibility rules. For example, if a letting agent or landlord holds tenants’ deposits, these are normally protected under separate tenancy deposit schemes, not the FSCS.

Why the Deposit Guarantee Scheme Matters

The FSCS strengthens trust in the UK’s financial system by protecting deposits and supporting consumers when financial institutions collapse. It ensures that:

• Savers can hold funds with confidence
• Businesses and individuals can pay and receive money without fear of loss
• The financial system retains resilience during difficult times

This scheme is more than just insurance for your savings—it is a cornerstone of financial stability in the UK.

Source: Other | 27-01-2025