From the start of December, UK bank customers will benefit from an increase to the maximum amount they would be reimbursed for if their bank were to fail.
The Prudential Regulation Authority (PRA) confirmed on Tuesday (18 November) that the deposit protection limit, which applies to the Financial Services Compensation Scheme, will protect up to £120,000 of a depositor’s money should their bank, building society, or credit union fail.
This increases the limit from the current £85,000 which was set in 2017. It is also more than the previous PRA proposal of £110,000, which has been changed in light of consultation feedback and to reflect the latest inflation data.
This increase in the deposit protection limit is the latest in a series of regulatory thresholds to be updated by the PRA, ensuring the rulebook is modernised and fit for today’s circumstances.
“This change will help maintain the public’s confidence in the safety of their money. It means that depositors will be protected up to £120,000 should their bank, building society or credit union fail. Public confidence supports the strength of our financial system,” said Sam Woods, Deputy Governor for Prudential Regulation at the Bank of England and CEO of the PRA.
On 1 December an increase in the limit applicable to certain temporary high balance claims will also come into force. This limit is used for qualifying life events like buying or selling a house and payouts from insurance policies and will increase from £1 million to £1.4 million.
“We welcome today’s announcement from the Prudential Regulation Authority (PRA) confirming that the FSCS deposit protection limit will increase,” said Martyn Beauchamp, CEO of the FSCS.
“This rise ensures that consumers can feel confident their money is safe, from the very first penny up to £120,000. At FSCS, we know that trust in financial services is vital for stability and growth. This enhanced protection will reassure consumers and support confidence in the UK’s financial system.”
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