UK Lifts Deposit Protection to £120k - Just Don’t Expect It if You’re a Trading Client

UK savers will benefit from a higher level of protection on their cash deposits, starting from 1 December 2025. However, the increase does not extend to brokerage or investment accounts, which remain capped at £85,000.

The Bank of England confirmed that the Financial Services Compensation Scheme (FSCS) deposit protection limit will rise from £85,000 to £120,000 per eligible depositor. This is the first increase since 2017 and exceeds the PRA’s earlier proposal of £110,000 following updated inflation data and industry feedback.

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Why the Regulator Is Increasing the Limit

The Prudential Regulation Authority (PRA) is required under the Deposit Guarantee Scheme Regulations 2015 to review the deposit protection cap at least every five years. Despite this, the limit remained unchanged for more than seven years - from January 2017 until November 2025.

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In March 2025, the regulator proposed raising the threshold to £110,000. Following consultation, the PRA confirmed a higher final limit of £120,000, reflecting stronger-than-expected inflation and the need to modernise regulatory thresholds.

Sam Woods, Deputy Governor for Prudential Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term at the Bank of England and CEO of the PRA, said the change “will help maintain the public’s confidence in the safety of their money,” ensuring depositors are protected should their bank, building society or credit union fail.

Brokerage and Investment Accounts Are Excluded

While the new £120,000 limit strengthens consumer protection for traditional deposit accounts, investment and brokerage accounts are not included in the increase. The investment-related FSCS framework falls under separate FCA rules and remains unchanged:

The protection limit for investment accounts stays at £85,000 per person per firm. Compensation applies only in cases such as firm insolvency, fraud or mismanagement - and does not cover losses caused by market fluctuations.

This regulatory split is crucial for clients of UK brokers and wealth managers. Although FSCS coverage still applies if an authorised investment firm collapses, the maximum available payout remains £85,000, with no alignment to the new deposit threshold. The PRA did not propose or consult on any changes to investment-account protections.

The difference in limits stems from the way UK financial regulation is structured. Deposit protection is set by the PRA, while investment-related FSCS protection falls under the FCA’s remit. Because these regimes operate separately, the PRA’s decision to raise the deposit limit does not automatically affect investment accounts.

The FCA has indicated that it has no immediate plans to change the compensation limits for the activities it oversees, including investment services. The regulator said it will keep the matter under review, but its primary focus remains on preventing firms from failing without meeting their redress obligations — rather than adjusting compensation caps.

What You Need to Know About the New Protection Limits

In addition to the main increase, the cap for certain temporary high balances, such as funds from property transactions, inheritances or insurance payouts, will rise from £1 million to £1.4 million, effective 1 December. These higher balances are protected for up to six months.

Consumers are also reminded that FSCS coverage applies per banking licence, not per individual account. If a customer holds money across several brands within the same banking group, all deposits are aggregated, and the £120,000 limit applies to the combined total.

To support the transition, the PRA has updated the required FSCS disclosure materials, including depositor information sheets and in-branch signage. Firms must adopt the new materials by May 2026.