In a significant move for UK savers, the protection limit for bank and building society deposits is set for a major increase, offering greater financial security from the start of December.
Enhanced Financial Safeguards
The Financial Services Compensation Scheme (FSCS) protection limit will jump to £120,000 per person, per authorised firm on 1 December 2025. This marks a substantial 41% rise from the current £85,000 threshold that has been in place for the last eight years.
This change means that if a bank, building society, or credit union were to fail, a larger portion of customers' savings would be protected. The initial proposal had been to raise the limit to £110,000, but this was revised upwards following consultation and in response to the latest inflation data.
Inflation Drives Bigger Boost
Experts confirm that consumers are benefiting from the fact that UK inflation is higher than officials had anticipated. The current rate of 3.8% played a direct role in the decision to implement a more generous protection limit.
The Bank of England’s Prudential Regulation Authority (PRA), which announced the change, stated that the proposed new limit was increased "in light of consultation feedback and to reflect the latest inflation data."
Boosting Public Confidence
Senior financial figures have welcomed the increase. Sam Woods, the PRA Chief Executive, stated that the new maximum limit "will help maintain the public’s confidence in the safety of their money."
Martyn Beauchamp, chief executive of the FSCS, echoed this sentiment, saying: "This rise ensures that consumers can feel confident their money is safe, from the very first penny up to £120,000."
Consumer group Which? described the hike as "a sensible decision" that supports trust in the financial services industry. Rocio Concha, Which? Director of Policy and Advocacy, added that it is a "timely reminder that strong consumer protections needn't hamper" aims to boost economic growth.
The banking industry's representative body, UK Finance, also supported the change. Eric Leenders, its Managing Director of Personal Finance, said it was "right" to update the limit for inflation and that the industry would help implement the new rules.
