Millions of Britons now keep at least some of their money with an app rather than a bank — Revolut, Monzo, Starling, Wise and a long tail of newer names. They're slick, the cards are pretty, and the in-app budgeting tools genuinely beat what the old high-street players offer. But there's a question most users never ask until it's too late: if my fintech goes bust, what actually happens to my money? The answer depends entirely on something buried in the small print — whether you're holding a bank account or an e-money account. They are not the same, and the difference matters most on the worst possible day.
The £85,000 question
If your provider is a fully licensed UK bank, your money is covered by the Financial Services Compensation Scheme up to £85,000 per person, per banking licence. Monzo and Starling both hold full banking licences, so cash sitting in those accounts has the same government-backed protection as money in Barclays or Lloyds. If the bank fails, the FSCS pays you back, usually within days, up to that £85,000 ceiling.
An e-money or payments firm is a different animal. Revolut spent years operating in the UK as an e-money institution rather than a bank (its UK banking licence has been a long, drawn-out saga), and Wise operates as a payments firm by design. Money in those accounts is not FSCS-protected. Instead it's covered by something called safeguarding.
What safeguarding actually is
Under FCA rules, an e-money or payments firm must keep customers' money separate from its own — "safeguarded" in segregated accounts at a separate bank, or covered by an insurance arrangement. The money isn't the firm's to spend or lend out. So if the fintech itself collapses, customer funds are supposed to be ring-fenced and returned, because they were never mixed into the failing business in the first place.
That sounds reassuring, and in the ordinary case it works. But safeguarding is genuinely weaker than FSCS in two ways that are easy to gloss over. First, there's no £85,000 government guarantee — you're relying on the money having been correctly segregated, and on whatever bank is holding the safeguarded funds not also being in trouble. Second, getting your money back from an administration process can be slow. Where FSCS aims to pay deposit-holders within seven days, recovering safeguarded e-money can take weeks or months while administrators untangle the accounts, and there's typically a cost deducted for that work. You're likely to get most of it back. You may not get all of it, and you almost certainly won't get it next Tuesday.
How to find out which one you've got
Don't assume. The branding gives you no clue — a fintech can look identical whether it's a bank or an e-money firm. A few quick checks settle it:
- Look in the app or on the website for the phrase "FSCS protected" and "authorised by the Prudential Regulation Authority". That combination means a full bank.
- If instead it says your money is "safeguarded" and the firm is "authorised by the FCA as an electronic money institution", it's e-money — no FSCS.
- Search the FCA's Financial Services Register for the firm's name; it states exactly what permissions they hold.
Revolut is the one that catches people, because so many treat it as their main account. Until its full UK banking licence is live and the accounts have migrated across, the bulk of customer money there sits under safeguarding, not FSCS.
So what should you actually do?
This isn't an argument for ditching fintech apps — they're useful, and safeguarding is real protection, not a con. It's an argument for matching the account to the job. Here's the sensible split:
- Keep your serious savings — the emergency fund, the house deposit, anything you'd be sick to lose — in a fully FSCS-protected bank account, and stay under £85,000 per licence.
- Use the e-money apps for what they're brilliant at: spending money, travel cards, splitting bills, the day-to-day float you move through each month.
- Don't let a large balance quietly accumulate in an e-money account just because the app is nicer to use. That's where the exposure builds up unnoticed.
One more wrinkle worth knowing: the £85,000 limit is per banking licence, not per brand or per account. Some challenger banks share a licence with a parent, and a few separate brands sit under the same one — so £85,000 in one and £40,000 in another that share a licence gives you £85,000 of cover total, not £125,000. If you're near the ceiling, check whose licence you're actually on.
The apps aren't going anywhere, and most people will never see their provider fail. But the five minutes it takes to learn whether your money is FSCS-protected or merely safeguarded is the cheapest insurance you'll ever buy.