What Is the Financial Services Compensation Scheme (FSCS)?
The Financial Services Compensation Scheme pays compensation when an authorised financial firm fails and can’t meet its obligations to you. It was set up in 2001 as a statutory scheme, and it is the safety net underneath UK financial services: if your bank collapses, the scheme, not the bank, makes you whole up to a limit.
It covers more than bank deposits. Investment business, home finance such as mortgage advice, and insurance policies all fall inside it, on different terms and at different limits. Those differences matter more than most summaries admit, and we come back to them below.
The scheme is funded by levies on firms authorised by the Financial Conduct Authority and the Prudential Regulation Authority, so compensation doesn’t come from taxpayers. That funding model is also why the protection follows the authorisation rather than the brand: what matters is which authorised firm holds your money, not which name is above the door.
What the FSCS Protects and the Limits That Apply
There is no single FSCS limit, and treating the deposit figure as the scheme figure is the most common mistake made about it. Each category has its own rules.
Deposits in Banks, Building Societies and Credit Unions
We checked each limit against the scheme own pages in August 2026. Money held with a UK-authorised bank, building society or credit union is protected up to £120,000 per eligible person, per firm, where the firm failed after 30 November 2025. That limit replaced £85,000 on 1 December 2025, and a great many comparison pages still print the old number.
For a business the limit bites sooner than people expect. When you set aside a quarter’s VAT ahead of the filing deadline and the trading balance is already sitting there, a modest company can pass £120,000 for a fortnight without ever feeling wealthy. Joint accounts are protected to the same £120,000 per eligible person, so a joint account held by two people carries up to £240,000 between them. The catch is that this is per person and not per account: hold an individual account and a joint account inside the same banking group and your share of both counts against one £120,000 allowance.
Investments, Insurance and Mortgage Advice
Investments are protected up to £85,000 per eligible person, per firm, for firms that failed after 1 April 2019. That covers losses arising from the advice you were given, from investment management, or from misrepresentation, rather than from the investment simply falling in value. Losing money because a fund performed badly isn’t a claim; losing it because the firm should never have sold you that fund may be.
Insurance works as a percentage rather than a cap. Long-term insurance, such as life cover, is 100% protected. Compulsory insurance, motor cover being the obvious example, is also 100% protected. General insurance, which is where home and travel policies sit, is 90% protected for firms that failed after 8 October 2020.
We rate that 90% figure as the single most misreported number in this area, and it was wrong on the previous version of this page too. If a general insurer fails while your claim is open, expect nine tenths of it, not all of it.
Home finance, meaning mortgage advice and arranging, is protected up to £85,000 per eligible person, per firm. Debt management is on the same £85,000 basis.
How the FSCS Protects Banks and Building Societies
If a UK-authorised bank, building society or credit union fails and can’t return your money, compensation is automatic for a straightforward deposit claim. The scheme aims to pay within seven working days of the failure, and you don’t have to apply.
Two things change that picture, and both are worth understanding before you decide where to put money rather than afterwards.
Shared Banking Licences and Why They Cut Your Cover
The limit attaches to the banking licence, not to the brand or the account. Where several brands trade on one licence, the scheme treats them as a single firm, and the £120,000 applies to everything you hold across all of them combined.
We would treat this as the rule rather than the edge case. Several familiar high-street names sit on shared licences, so when you spread a business reserve across three brands to stay under the limit, you can find all three counting against one allowance and nothing gained. The only reliable way to get two separate £120,000 allowances is to hold the money with two firms that don’t share a licence. When you run payroll from one account and keep reserves in another under the same group, both sit inside one allowance.
Check before you split the money, not after. The Financial Conduct Authority publishes the Financial Services Register, and you can search it to see which brands sit under which authorised firm.
Temporary High Balances
The scheme recognises that a balance is sometimes unusually large for a short and unavoidable reason, and it protects those balances up to £1.4 million for six months from the date the money was first deposited.
The qualifying events are life events rather than investment decisions: the proceeds of a house sale, an inheritance, a redundancy payment, an insurance settlement. If you sell business premises and the completion money sits in your account while you buy the next unit, that’s the situation this rule exists for. If you sell a house on the Friday and complete on the next purchase five weeks later, the money sitting in between is covered well above the ordinary limit.
Unlike an ordinary deposit claim, a temporary high balance is not paid automatically. You have to contact the scheme and apply, and those cases take longer than seven working days because someone has to establish that the balance qualifies.
What If I Have More Than One Account With the Same Bank or Building Society?
Several accounts with one bank are treated as one holding. When you receive a large customer payment into the current account while a savings pot is already full, the two are added together on the day the money lands, not at year-end. Your current account, your savings account and any fixed-term deposit with the same institution are added together, and the total is protected up to £120,000 per person rather than £120,000 each.
The same applies across brands that share a banking licence, which is the version of this that catches people out. The principle is one allowance per licence, per person, and the number of accounts is irrelevant to it.
When you hold more than the limit, whether that is a personal balance or a business reserve waiting on a VAT payment, spreading it across institutions with separate licences is what protects it. That’s a small amount of admin against the cost of being an unsecured creditor for the excess, and it’s worth doing before a balance grows rather than after.
How Can I Check a Bank’s FCA Registration?
Search the Financial Services Register, published by the Financial Conduct Authority. You can look a bank up by name or, if you have it, by its firm reference number, and the entry tells you whether the firm is authorised, what it is authorised to do, and which trading names sit under it.
That last part is what makes the register useful for this purpose rather than merely reassuring. Two brands you assumed were separate banks often turn out to be trading names of one authorised firm, and the register is where that shows up.
When you open a business account with a provider that does not call itself a bank, this is the check to run before you move any money into it. An electronic money institution is authorised, and its entry says so, but its customers aren’t covered by this scheme at all.
How Do I Make a Claim With the FSCS?
For a failed bank, building society or credit union, most people never make a claim: compensation for an ordinary deposit is paid automatically, and the scheme aims to do it within seven working days. Everything below applies to the cases that are not automatic, including investments, insurance, mortgage advice and temporary high balances.
We would gather the paperwork before you start, because the process is faster with it than without. That means account statements, policy documents and any correspondence with the firm, along with anything showing what you were told and when.
Claims start on the scheme’s own website, in the section for starting a claim, and the online route walks you through it. You provide your details, upload the supporting documents, and submit. The scheme reviews the claim and may come back with questions.
A decision usually takes a few months, and complex claims take longer, particularly high-value ones and temporary high balances where the qualifying event has to be evidenced. If you can’t use the online service, the scheme accepts claims by phone and by post, so the digital route is not the only one.
Claiming is free, and you never need to pay anyone to do it for you. If you’re chasing the money to cover a supplier bill or a payroll run, that percentage is the last thing you want to give away. A claims management company will charge a percentage of your compensation to submit the same form you can submit yourself.
FAQs
How much does the FSCS protect?
It depends what you hold. Deposits with a bank, building society or credit union are protected to £120,000 per eligible person, per firm, for firms that failed after 30 November 2025. Investments, mortgage advice and debt management are £85,000 per eligible person, per firm. Long-term and compulsory insurance are 100% protected, and general insurance is 90%. Verified from fscs.org.uk in August 2026.
Is the limit per account or per bank?
Per person, per banking licence. Every account you hold with the same institution is added together against one £120,000 allowance, and where several brands share a banking licence they count as one institution. To get a second £120,000, the money has to sit with a firm holding its own licence. Check which brands share one on the Financial Services Register.
What is a temporary high balance?
A balance that is unusually large for a short period because of a life event: a house sale, an inheritance, a redundancy payment or an insurance settlement. Those balances are protected up to £1.4 million for six months from the date the money was first deposited. Unlike an ordinary deposit claim, this is not paid automatically and you have to apply for it.
Are joint accounts covered twice?
A joint account is protected at £120,000 per eligible person, so two account holders are covered up to £240,000 between them. It is not a second allowance, though: if you also hold an individual account with the same banking group, your share of the joint account and the whole of the individual account count against one £120,000 limit.
Does the FSCS cover e-money and payment accounts?
No. Electronic money institutions and payment institutions are authorised by the Financial Conduct Authority, but they are not banks and their customers aren’t covered by this scheme at any figure. Their obligation is to safeguard customer money in segregated accounts at a credit institution instead. If deposit protection matters to you, hold the balance with a licensed bank.
How long does compensation take?
For a failed bank, building society or credit union, the scheme aims to pay ordinary deposit claims automatically within seven working days. Other claims take longer: a decision usually arrives within a few months, and complex or high-value claims, including temporary high balances, take longer still because the circumstances have to be evidenced.
How we checked these figures
What we checked. Every limit, percentage and timeline on this page was read directly from the Financial Services Compensation Scheme’s own site in August 2026, taking each figure with the category it applies to and the failure-date qualification attached to it.
Data sources. fscs.org.uk/what-we-cover/ for the limits by category, and fscs.org.uk/what-we-cover/banks-building-societies-credit-unions/ for the deposit rules, joint accounts, temporary high balances, the payout target and the treatment of shared banking licences. No aggregator or comparison-site data was used.
Update cadence. We re-verify this page when the scheme changes a limit or a rule, and the verification date reflects the most recent full review. See our editorial policy.