FSCS Protection Explained: Limits, Licences and Temporary High Balances

The FSCS deposit protection limit rose to £120,000 on 1 December 2025, up from the £85,000 that had applied since 1 January 2017. That matters beyond the headline, because a great deal of published material, internal training content and client-facing explanation still carries the old figure — and a firm telling a client their savings are protected to £85,000 is now understating the position by £35,000 per person per firm.

It is also worth knowing that the limit is only one of several, and the others did not move together. FSCS protection is not a single number; it is a set of different rules by product type, and the differences are large enough to change advice.

Deposits: £120,000, with two traps

The deposit limit is £120,000 per eligible person or company, per authorised firm, covering current accounts, savings accounts and cash ISAs.

Joint accounts help. The limit applies to each named account holder, so a couple holding a joint account and nothing else at that firm could receive up to £240,000 between them.

Shared banking licences hurt, and this is the one that catches people out. Brands sharing a single authorisation number count as one firm for FSCS purposes, so spreading money across two brands under the same licence gives a total of £120,000, not £240,000. Checking the authorisation number rather than the brand name is the only reliable way to know, and it is the single most useful thing an adviser can tell a client with substantial cash holdings.

Temporary high balances cover the exceptional sums that pass through an individual’s account around major life events — property purchase funds, marriage or divorce payments, redundancy payouts. These are typically protected up to £1.4 million, and in some cases without limit: certain benefits, such as those for disability or personal injury, receive unlimited protection for up to six months.

Investments: £85,000, which is a different number entirely

Investment protection remains £85,000 per person per authorised firm, and this includes investments held inside a personal pension such as a SIPP. The deposit limit moved; the investment limit did not. A client who assumes one figure applies across their holdings at the same firm will be wrong about at least one of them.

Pensions split across two regimes

Pension protection depends on the legal form of the arrangement rather than on the word “pension”. Pension savings or retirement income provided under a life insurance contract, including an annuity, are protected in full with no cap. Investments held within a SIPP fall under the £85,000 investment limit.

That is a material difference in outcome for an identical sum of retirement money, decided by product structure. It is the clearest example of why FSCS protection cannot be summarised in one sentence to a client.

Insurance is measured in percentages, not pounds

Insurance protection has no cash cap. It is expressed as a proportion of the claim, and the proportion depends on whether cover is compulsory.

General insurance. Home, pet, travel, payment protection and other general policies are protected at 90% of the claim. For compulsory classes — car insurance, employers’ liability and professional indemnity — the entire third-party element is protected, plus 90% of the remainder.

Long-term insurance. Claims for death or incapacity through injury, sickness or infirmity are protected in full. So are endowment policies, investment bonds, and pension savings or annuities provided under life insurance.

Insurance broking. Protected at 90% of the claim with no upper limit, and at 100% for any compulsory element such as third-party motor cover.

Advice and intermediation

Two further categories sit at £85,000 per person per firm. Mortgage advice or broking is protected at that level, but the cover is for the advice itself — not for lending or administration costs. Debt management is also protected at £85,000, with a date condition: the firm must have failed on or after 1 April 2018.

Who pays for it

FSCS is funded by the financial services industry through levies and is free for consumers to use. For a regulated firm this is not an abstraction: the levy is a cost of authorisation, and it is the mechanism by which the conduct failures of other firms become a line in your own budget. Firms holding client money face the related prudential and operational burden under the CASS client assets rules, and investment firms carry capital requirements under the Investment Firms Prudential Regime designed to reduce the chance of a claim arising in the first place.

Where this goes wrong in practice

Three failure modes recur, and all three are competence issues rather than systems issues.

The first is a stale figure. Material written before December 2025 says £85,000 for deposits and is now wrong. Any firm with client-facing content, scripts or training decks should assume it needs checking.

The second is applying one limit to everything. Deposits are £120,000, investments £85,000, insurance a percentage, some pensions unlimited. A single-number answer to “am I protected?” is wrong for most clients.

The third is brand confusion. A client who has carefully split savings across two names under one licence has achieved nothing, and will only discover it at the worst possible moment.

Our CPD course library covers the regulatory and client-advice foundations this sits on for finance professionals who need working knowledge rather than a specialist qualification.

Frequently asked questions

Is the deposit limit £85,000 or £120,000?

£120,000, per eligible person per authorised firm, since 1 December 2025. The £85,000 figure applied from 1 January 2017 to 30 November 2025 and is still widely quoted in material that has not been updated.

Did the investment limit rise too?

No. Investment protection remains £85,000 per person per authorised firm, including investments held within a SIPP. Only the deposit limit changed.

How do I know whether two banks share a licence?

By the authorisation number rather than the brand. Brands sharing a single authorisation number are treated as one firm, so the limit applies once across all of them. FSCS publishes a checker for exactly this question.

Is there any protection above £120,000 on deposits?

Yes, in defined circumstances. Temporary high balances arising from events such as a property sale, a divorce settlement or a redundancy payment are typically protected up to £1.4 million, and certain disability or personal injury benefits are protected without limit, for up to six months.

Are annuities capped?

No. Pension savings and retirement income provided under a life insurance contract are protected in full, which is a different and more generous treatment than investments held in a SIPP.