Sell a house in April, and the proceeds might sit in your current account for six weeks while the new place completes. Get made redundant with a decent payout, and the severance cheque lands somewhere too. For a growing number of savers, that "somewhere" now needs to be chosen more carefully than it did in 2025 — because the amount the Financial Services Compensation Scheme actually protects has changed, and the rules about what counts as one bank haven't caught up in most people's heads.
Why £120,000, not the £110,000 that was originally proposed
The Prudential Regulation Authority first floated raising the FSCS deposit limit from £85,000 to £110,000 back in March 2025, a figure meant to track inflation since the limit was last set in 2017. By November 2025, after industry consultation, the PRA landed somewhere higher: £120,000 per eligible depositor, per authorised institution, effective from 1 December 2025. That's a 41% jump on the old ceiling in under a year, and it's the first change to the headline number since the post-financial-crisis era settled on £85,000.
FSCS itself is running a national awareness campaign from 2 March 2026 specifically because internal research showed most savers either didn't know the limit had moved or assumed it covered every account they held with a banking group, brand by brand. Neither assumption is safe, and the second one is the one that actually costs people money when a firm fails.
The catch: protection runs per banking licence, not per brand on your statement
Here's the part that trips people up. FSCS protection applies per person, per authorised firm — and "firm" means the entity holding a Prudential Regulation Authority banking licence, not the trading name printed on your debit card. Several familiar high-street names share one licence behind the scenes. Halifax, Bank of Scotland and Lloyds Bank all sit under the same Lloyds Banking Group authorisation, so £50,000 in a Halifax easy-access account and £80,000 in a Bank of Scotland cash ISA add up to £130,000 exposed under one roof — £10,000 above the new £120,000 ceiling, even though the two brands look entirely separate in your banking app. HSBC and First Direct work the same way: one licence, shared limit. So do some smaller building society brands operated under a single mutual's authorisation. The Financial Conduct Authority's register and the FSCS website both let you check which licence a given brand actually sits under, and it's worth five minutes of your time before you assume two "different" banks are protecting you twice.
Joint accounts genuinely double the cover — this one works in your favour
Not every quirk of the system cuts against savers. A joint account is treated as if each holder has their own individual claim, so a couple with £200,000 in a shared savings account is covered up to £240,000 between them — £120,000 each — even though the money sits in a single account with a single sort code and account number. That makes joint accounts one of the simplest, most underused ways to raise effective protection on a lump sum without opening a second bank relationship.
Splitting a large balance between a sole account and a joint account with the same partner, at the same bank, pushes total household cover to £360,000 under one institution: £120,000 on the sole account and £120,000 each on the joint one. Do the maths on your own household before assuming you need three separate banks — you might already have more headroom than you think.
Temporary high balances: the protection most people have never heard of
Sell a family home, inherit an estate, or collect a large pension lump sum, and that money can sit well above £120,000 for weeks or months while you decide what to do with it. FSCS has a separate category for exactly this — temporary high balances — covering deposits up to £1.4 million for up to six months from the date the money was received, provided it came from one of a defined list of life events: property sale proceeds, inheritance, redundancy or divorce settlements, insurance payouts, and a handful of others set out in the FSCS rules. This category doesn't apply automatically to every large balance, though — it has to be traceable to a qualifying event, and FSCS will ask for evidence (a completion statement, a grant of probate, a settlement letter) if a claim ever arises. A £340,000 house sale that clears into your current account counts; the same balance built up slowly from years of ordinary saving does not. It's not something to rely on as a permanent parking spot. But it does mean you're not forced to fragment a house sale across five banks the same afternoon the solicitor's cheque clears, which is the panic move a lot of savers make when they hear "£120,000 limit" and nothing else.
What the higher limit does not touch
The £120,000 figure applies specifically to cash deposits — current accounts, savings accounts, cash ISAs, fixed-rate bonds. Investment protection under FSCS stayed at £85,000 per firm; that limit covers stocks and shares platforms, investment ISAs and pension products if the investment firm itself fails (not if the underlying investments simply lose value, which FSCS never covers). Insurance claims, mortgage advice and debt management protection also sit outside this change, each with its own separate cap.
Confusing the two is an easy mistake, and it matters: someone who reads "£120,000 protection" and assumes it covers their entire Hargreaves Lansdown SIPP alongside their Nationwide savings account is working from the wrong number for half their portfolio.
Neobanks and challenger banks: same scheme, different plumbing
Monzo, Starling and most other UK challenger banks hold their own full banking licences and sit inside the FSCS scheme exactly like any high-street name — deposits up to £120,000 per person, per licence, no asterisk. Revolut is the case that actually needs checking: its main current account product has operated through an e-money licence rather than a full banking licence for most UK customers, which historically meant balances sat outside FSCS deposit protection entirely (covered instead by e-money safeguarding rules, a materially weaker form of protection). Revolut has been rolling out FSCS-protected accounts under its UK banking licence to customers in phases since 2025, but not every Revolut customer has necessarily been migrated, so it's worth checking your own account status in-app rather than assuming Monzo-style cover by default.
Check this directly in your banking app or on the FSCS protection checker before treating any challenger bank balance as automatically covered — the difference between an e-money wrapper and a full banking licence is the difference between full protection and none at all if the firm goes under.
A practical way to spread savings above £120,000
Start with the licence check, not the brand names. List every account you hold, look up which PRA-authorised entity actually sits behind each one, and group them. It's entirely possible to think you're diversified across four banks and discover you're really exposed to two licences.
From there, the better move for most savers with six figures in cash is a mix of full protection and simple admin: one main current account, one or two easy-access savings accounts at genuinely separate licences, and a fixed-term bond or cash ISA at a third, keeping each provider's total comfortably under £120,000. Don't chase an extra 0.1% of interest at a smaller building society if it means shuffling five separate logins for the sake of a marginal return — the FSCS limit is generous enough now that most people don't need more than three or four relationships to stay fully covered. If you're holding a genuinely large, temporary balance from a house sale, keep the paperwork that proves it, and don't assume you need to solve the whole problem in the first 48 hours.