Savings Protection

Key takeaways

• The Financial Services Compensation Scheme (FSCS) is a UK deposit guarantee scheme that acts as a financial safety net for your savings

• If a bank fails, the FSCS automatically compensates up to £120,000 within 7 days

• The £120,000 compensation limit applies per institution and not per account

• Be aware of accounts that aren't protected by the FSCS

• Monitor your savings growth to stay within the protected threshold

Since the 2008 banking crisis, when a number of household-name financial institutions collapsed, Britons have been more wary than before about where they stash their savings.

The good news is that there are robust safeguards in place to protect savers' money, offering peace of mind in an otherwise uncertain financial landscape.

Is my money safe in a savings account?

If your money is held with a UK institution which is regulated by the Financial Conduct Authority (FCA), you will have protection through the Financial Services Compensation Scheme (FSCS) should something goes wrong.

Under the FSCS, the first £120,000 a depositor puts into their account (or £240,000 if your money is held in a joint account) is protected in the event that the bank or building society goes bust.

This coverage is crucial for individual financial security and ensures that savers can trust in the stability of their chosen financial institutions.

Remember: the £120,000 compensation limit applies per institution and not per account.

That means if you have, for example, £70,000 in an easy access account and £70,000 in a fixed rate bond, both held with the same bank, you’d stand to lose £20,000 in the event that the bank went bust because your deposit protection limit is a total of £120,000.

Therefore, it's wise for savers with substantial savings to avoid holding more than £120,000 in any one bank to ensure full protection under the FSCS. This limit was raised to £120,000 from £85,000 on 1 December 2025.

Which savings accounts are protected by FSCS?

The FSCS covers a wide range of savings accounts and products, ensuring that most types of savings are secure. These include:

• Savings accounts (including sharia accounts)

• Cash ISA

• Lifetime ISA

• Help to Buy ISA

• Some guaranteed equity bonds

• Money saved within a SIPP pension (though it's advisable to check with the provider for specifics)

In addition to savings accounts, current accounts and small business bank accounts are also protected.

Which savings accounts aren’t protected by FSCS?

While many accounts are covered, there are some exceptions to FSCS protection:

• Savings stamp schemes

• Christmas hamper clubs

• PayPal accounts

• Prepaid cards

• Loyalty points

How to make a claim if my bank goes out of business?

In the unfortunate event that a bank fails, the FSCS automatically compensates up to £120,000 within 7 days.

However, if this doesn’t automatically happen, then you can make a claim directly to the FSCS.

This process is designed to be as smooth as possible, minimising stress during what can be an anxious time for depositors.

Are my savings at risk when I use different banks?

It's important to note that savings in different banks could be at risk if the banks share the same banking licence.

For example, Halifax is part of the Bank of Scotland group, and Post Office Financial Services and AA Financial Services are part of the Bank of Ireland Group.

Banks with shared licences mean protection is still limited to £120,000 per customer across all brands, not £240,000.

Therefore, it's crucial to check bank ownership to understand the levels of protection for savings over £120,000.

An easy way to check is to use the FSCS protection checker. You can include all your accounts and your deposit values and it will check whether they are under the same banking umbrella to tell you if you’re covered.

What is the Financial Services Compensation Scheme?

The FSCS is a UK deposit guarantee scheme that acts as a financial safety net, protecting cash if a financial institution fails.

It is fully funded by the financial services industry. Firms authorised by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) pay an annual levy that funds the cost of running the service.

Knowing that there is a system in place to protect your investments can provide significant reassurance in times of economic uncertainty.

Are my NS&I savings safe?

For those who have invested in National Savings and Investments (NS&I), the good news is that NS&I savings are fully protected as it is government-backed. This means that your investments with NS&I are secure, regardless of how much you have saved.

What can I do to protect my savings?

When it comes to protecting your savings, there are several steps you can take to ensure your money is secure.

Can my interest rate send me over my compensation limit?

It's worth noting that interest can push your savings over the £120,000 limit, which could put your compensation at risk. Keep an eye on your savings growth to ensure you remain within the protected threshold.

What happens if I exceed the £120,000 protection limit?

For temporary high balances over £120,000, such as after selling a property or receiving an inheritance, the FSCS offers protection for six months.

For ongoing large balances, it's advisable to seek advice from a personal finance specialist to explore the best options for safeguarding your funds.

Kara Gammell
Personal Finance & Insurance Expert

Our expert says

“The FSCS guarantee offers great security for your finances and means that a FCA-regulated savings account is much safer than stashing notes under the bed!

"The most important thing is to spread your savings between different financial institutions if you have more than the £120,000 limit.”

Compare savings accounts with MoneySuperMarket

MoneySuperMarket offers a comprehensive range of savings accounts to suit various needs and financial goals.

All the providers available through MoneySuperMarket are FCA regulated and benefit from full FSCS protection, giving you the confidence that your savings are secure.