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The Financial Services Compensation Scheme is the UK's deposit guarantee scheme. It protects eligible deposits by providing compensation to depositors if a firm fails, up to limits set by the Prudential Regulation Authority.
The PRA recently consulted on amendments to the depositor protection framework about the level of protection that the FSCS provides. In particular, the PRA proposed to:
- increase the deposit protection limit from £85,000 to £110,000 from 1 December 2025;
- increase the limit applicable to certain temporary high balance (THB) claims from £1 million to £1.4 million from 1 December 2025;
- require firms to update disclosure materials and deposit compensation information by 31 May 2026;
- update SS18/15 – Depositor protection with the PRA's expectations on the proposed rule changes, and to correct references and delete expired text, with effect from 1 December 2025; and
- update the SoP1/15 – Deposit guarantee scheme to reflect the proposed rule changes, with effect from 1 December 2025.
Following consultation, the PRA has issued a policy statement saying that the deposit protection limit is to be increased to £120,000, rather than £110,000 as consulted on.
HM Treasury has confirmed its approval of the change to the deposit protection limit.
The new deposit protection and THB limits apply from 1 December 2025 (for firm failures occurring on or after that date). Firms are required to update their single customer view systems – which provide information about eligible deposits to enable the FSCS to quickly compensate depositors in the event of a firm's failure – to reflect the new limit from that date.
Deposit takers will then have up to six months to make changes to disclosure materials, which will need to be completed by 31 May 2026.
The FSCS will make available information on its website to assist firms in connection with the new limits and information requirements.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
