Unlocking Savings Security: UK Increases Bank Deposit Protection to £120,000!

Customers with bank accounts in the UK are set to benefit from an increase in their deposit protection limit from £85,000 to £120,000 starting this December. This significant update comes from the Prudential Regulation Authority (PRA), marking the largest increase since the limit was established in 2017.

Martyn Beauchamp, CEO of the Financial Services Compensation Scheme (FSCS), emphasizes that this change allows customers to feel secure about their money, ensuring that their funds are protected right from the first penny up to the new limit of £120,000. The decision results from both inflation data and feedback from public consultations, exceeding the formerly proposed limit of £110,000.

The FSCS protection is applicable per person and per authorized firm, meaning customers who bank with firms operating under the same license should be mindful of the total balance across brands covered under this cap. The changes will apply automatically, requiring no action from the customers.

Sam Woods, deputy governor for prudential regulation at the Bank of England, reinforced that this adjustment will bolster public confidence in the financial system, crucial for its overall strength. Consumer group Which? welcomed the increase, labeling it a sensible decision that enhances consumer trust in the financial services sector.

Moreover, the limit for temporary high balances—intended for significant life events like a house sale or an insurance payout—will also see a raise from £1 million to £1.4 million for a span of six months. The FSCS is funded by a levy on financial firms authorized by the PRA or the Financial Conduct Authority (FCA), ensuring a robust safety net for depositors.