If you’ve got money in a UK bank, building society, or credit union, here’s something that should put a smile on your face. The people who keep an eye on the banks – the Prudential Regulation Authority (PRA) – have just confirmed that the amount the Financial Services Compensation Scheme (FSCS) will protect is jumping from £85,000 to £120,000 per person, per bank.

The new higher limit kicks in on 1 December 2025.

This is actually the first proper increase we’ve had since 2017, and the main reason is to make sure the safety net keeps up with inflation and the way we all handle money these days.

What exactly does this mean for you?

If your bank or building society ever went bust (which, let’s be honest, doesn’t happen often but does happen), the FSCS would automatically step in and give you back up to £120,000 of your money – completely free and usually pretty quickly.

It’s £120,000 per person, per banking licence. So if you have a joint account with your partner, you’re both covered separately – that’s up to £240,000 for the two of you in the same account.

The PRA said they listened to what ordinary people said during their consultation, and pretty much everyone wanted a bigger safety net. Fair enough!

Temporary big balances are getting a boost too

We all have those moments when a lump sum lands in our account – selling a house, inheriting money, getting an insurance payout, a divorce settlement, or even redundancy pay. The FSCS already had a special rule for these “temporary high balances,” and that limit is going up as well.

From December, you’ll be protected for up to £1.4 million for six months in those situations. That’s a decent chunk of extra peace of mind when life throws a big cheque your way.

Why this actually matters

Martyn Beauchamp, the boss of the FSCS, put it really well: the higher limits give people “greater certainty that more of their money is protected.” And Sam Woods from the PRA said it helps keep everyone confident that their cash is safe in the bank.

In a nutshell, it’s one of those quiet changes that makes the whole financial system feel a bit more solid – and that’s good for all of us.

Our take on the Changes

The FSCS plays a crucial role not only when firms collapse, but also when poor advice or mis-sold financial products cause losses. The updated limits strengthen protection for savers, but they also highlight how important it is to understand:

• Where your money is held
• Whether the firm is FSCS-authorised
• Whether your products fall under FSCS deposit protection or investment protection.

If you’re unsure whether you were properly advised, or you’ve suffered losses due to mis-selling, Claim My Loss can help you understand your options.