The Bank of England (BoE) on 18 November 2025 announced that the deposit protection limit under the Financial Services Compensation Scheme (FSCS) will be raised to £120,000 per person from the current £85,000, a roughly 40 % increase aimed at reinforcing savers’ confidence in the banking system.
The decision follows years of pressure from inflation, as the previous limit had remained unchanged since 2017. The regulator’s move places the UK’s protection above the EU’s €100,000 (approximately £86,300) threshold, though it still lags the US standard of $250,000. Alongside this change, the cap for “temporary high balances” — for events such as proceeds from a home sale — will rise from £1 million to £1.4 million.
For financial institutions, the revision means increased contributions to the FSCS fund, though the BoE has estimated the cost increase to banks will remain under 0.1 % of their annual net income. The update may prompt banks to adjust their risk management by increasing reserves or modifying interest rate strategies for deposit accounts.
From the perspective of savers and the broader financial sector, the enhanced guarantee offers clearer protection against bank failures and may reduce panic‑driven outflows in stress periods. However, analysts caution that protection limits address only part of depositor risk, and financial firms will still face scrutiny over liquidity management and business‑model resilience.
In conclusion, the boost to the UK deposit guarantee scheme marks an important step in bolstering public trust in the banking system, particularly amid inflationary pressures and recent global banking‑sector turbulence. As the new limits take effect on 1 December, both savers and firms will need to adjust expectations in a financial‑services environment shaped by evolving regulatory safeguards.
