The Financial Services Compensation Scheme (FSCS) is the UK’s safety net when an authorised financial firm fails. It covers deposits at banks, building societies, and credit unions up to £120,000 per person per institution, insurance claims at either 90% or 100% of the claim value depending on the policy type, and investments, pensions, mortgage advice, debt management, and funeral plans up to £85,000 per person per firm. The scheme is free to use and pays out only when the firm itself has gone under or given negligent advice — not when your investments simply lose value.1Bank of England. What Is the FSCS and What Is the New Deposit Protection Limit?
When the FSCS Steps In
Two things have to be true before the FSCS can pay you. First, the firm has to be authorised by the Financial Conduct Authority (FCA) or the Prudential Regulation Authority (PRA) to carry out the activity you’re claiming about.2Financial Services Compensation Scheme. What We Cover Second, that firm has to be “in default” — the FSCS’s term for a firm that can’t meet the claims against it. The FSCS confirms default by contacting the firm, checking public records, and giving it a chance to respond, though the declaration happens automatically once a firm enters formal insolvency.3Financial Services Compensation Scheme. Default Policy
The scheme covers institutional failure, not market losses. If your fund drops in value because share prices fell, the FSCS cannot help. It steps in when the firm holding or managing your money collapses, or when a regulated firm’s bad advice causes you financial harm.
Compensation Limits by Product
How much you get back depends on what you held with the failed firm. The deposit limit rose from £85,000 to £120,000 on 1 December 2025; other categories stayed where they were.4Financial Services Compensation Scheme. Deposit Protection Limit Increase
Deposits
Money in savings and current accounts at UK-authorised banks, building societies, and credit unions is protected up to £120,000 per eligible person, per authorised institution.5Financial Services Compensation Scheme. Banks, Building Societies and Credit Unions The limit applies across all your accounts with the same banking group. Two banks sharing a single authorisation count as one institution for this purpose, which is why it matters to know who actually holds the licence behind a brand.
Deposit claims are typically paid within seven days of the firm failing, making them the fastest FSCS payout.6Financial Services Compensation Scheme. FSCS Welcomes Higher Deposit Protection Limit of £120,000
Insurance
Insurance works on percentages rather than a pound cap. For firms failing after 8 October 2020:2Financial Services Compensation Scheme. What We Cover
- 100% of the claim, with no upper limit, for compulsory insurance (such as third-party motor cover), long-term insurance including life policies, professional indemnity insurance, claims arising from death or incapacity, and building guarantee policies
- 90% of the claim for everything else, including home and travel policies
The 100% bracket is broader than many people expect. Life insurance and pensions written by a UK-regulated insurer get full protection with no cap, which is a meaningful difference from the £85,000 that applies to most other financial products.7Bank of England. PRA Confirms FSCS Deposit Limit to Be Increased to £120,000 From 1 December
Investments, Pensions, Mortgages and Other Products
Most other regulated products share a single ceiling: £85,000 per eligible person, per firm.4Financial Services Compensation Scheme. Deposit Protection Limit Increase That covers:
- Investments — losses caused by a failed firm’s negligence or mismanagement
- SIPP operators — if a self-invested personal pension operator fails
- Bad pension advice — if a regulated adviser gave you negligent pension transfer advice
- Mortgages — losses from a failed mortgage adviser or arranger
- Debt management and funeral plans — where the provider was FCA-authorised
Pensions have a split worth understanding. A pension held with a UK-regulated insurer that fails gets 100% cover with no upper limit. A failed SIPP operator or negligent pension advice sits under the £85,000 cap instead.8Financial Services Compensation Scheme. Pensions
Joint Accounts and Banking Groups
Each holder of a joint account counts as a separate person for FSCS purposes. A joint account holding £240,000 when the bank fails is fully covered because each holder can claim up to £120,000.5Financial Services Compensation Scheme. Banks, Building Societies and Credit Unions
Two things complicate that. If one joint account holder also has an individual account at the same bank, the £120,000 limit applies to that person’s combined total across both. And a business partnership counts as a single claimant regardless of how many partners it has, so a partnership receives one £120,000 payout, not one per partner.5Financial Services Compensation Scheme. Banks, Building Societies and Credit Unions
Temporary High Balance Protection
If a major life event pushes your balance well above £120,000, the FSCS provides enhanced cover of up to £1.4 million for six months from the date the money was first deposited.9Financial Services Compensation Scheme. Temporary High Balances Qualifying events include:
- Proceeds from selling your main residence
- Inheritance or benefits payable on death
- Redundancy payments
- Insurance policy payouts
- Personal injury compensation
- Divorce or dissolution of a civil partnership
- Retirement benefits
The six-month window gives you time to redistribute large sums across multiple institutions before the standard cap applies again.4Financial Services Compensation Scheme. Deposit Protection Limit Increase
What the FSCS Does Not Cover
Several gaps catch people off guard, and it’s worth knowing where the scheme stops.
E-money and payment apps. Money held with e-money institutions and payment providers is not FSCS-protected, even though those firms are FCA-regulated. If a fintech app holds your balance as e-money rather than as a bank deposit, that money sits outside the scheme.10Financial Services Compensation Scheme. Pots, Pockets, Piggy Banks and Vaults: Keeping Track of Your Money Some apps route money through an underlying bank, in which case the bank deposit itself may be protected, but that depends on the specific arrangement.
Cryptocurrency. The FCA does not regulate most cryptoassets, so the FSCS cannot help if a crypto exchange or platform collapses.11Financial Services Compensation Scheme. Cryptoassets – Are They Covered, and What’s the Risk?
Market losses. Falling share prices, fund values, or property prices are not a firm failure. The FSCS covers the firm’s collapse or its bad advice, not poor performance.
Firms without UK authorisation. The FSCS has no jurisdiction over firms that aren’t authorised by the FCA or PRA. Checking the FCA register before you open an account or buy a product is the simplest way to confirm coverage exists at all.
Who Can Claim
Eligibility follows rules set by the FCA and PRA. Most private individuals qualify automatically, along with some charities and certain trustees.12Financial Services Compensation Scheme. Compensation Rules and Eligibility Smaller businesses can also claim, though the definition of “small” varies by product type. For investment claims, a company must be small under section 382 of the Companies Act 2006, meeting at least two of three tests based on annual turnover, balance sheet total, and number of employees.13Financial Services Compensation Scheme. Small Businesses and Limited Companies Protection Larger businesses are generally excluded, though the rules are slightly broader for deposit and insurance claims.
Where you live is not the issue. Eligibility turns on whether the firm was UK-authorised and carrying out a regulated activity, so overseas customers of a UK-authorised bank should still be protected on their deposits.
How Claims Work in Practice
For deposit claims you usually don’t have to do anything. When a bank or building society fails, the FSCS contacts eligible depositors directly and aims to return funds within seven days. Other claims go through the FSCS online portal, and processing times run considerably longer. As of April 2026, the FSCS estimates around 5 months for PPI and mortgage claims, around 10 months for investment claims, and around 12 months for pension claims.14Financial Services Compensation Scheme. How Long Will My Claim Take? Complex cases can run longer. The service is free, and no fees are deducted from any compensation paid.