Why the FSCS's Boosted Deposit Guarantee Quietly Reshapes How UK Savers Should Spread Their Cash in 2026 and How the EU's €100,000 Scheme Still Leaves a Protection Gap

Q: Is the FSCS deposit protection limit now £120,000 or £110,000?

It is £120,000 . The £110,000 figure was the PRA's initial consultation proposal from March 2025. The final confirmed limit — set by the Bank of England's Prudential Regulation Authority in PS24/25 — is £120,000 per eligible person, per banking licence, and took effect on 1 December 2025.

Q: How much savings are protected if I have accounts with both Halifax and Bank of Scotland?

Only £120,000 in total across both accounts, because Halifax and Bank of Scotland share a single FSCS banking licence. Holding £80,000 in each gives you £160,000 across those two brands — but £40,000 of that would be unprotected if the institution failed.

The FSCS deposit protection limit now stands at £120,000 per person, per banking licence a significant and under-reported step up from the long-standing £85,000 cap that held for over a decade. For UK savers holding substantial cash balances in 2026, this reshapes the arithmetic of deposit spreading entirely. Yet the limit's full power can only be unlocked if savers understand one critical rule: protection is tied to banking licences, not brand names and the EU's harmonised €100,000 ceiling means expats and cross-border savers must apply a different calculation on the Continent.

The £110,000 Safety Net: Why the FSCS's Boosted Deposit Guarantee Quietly Reshapes How UK Savers Should Spread Their Cash in 2026 — and How the EU's €100,000 Scheme Still Leaves a Protection Gap

The New £120,000 Threshold: What Changed, When and Why It Matters

The FSCS protection limit increase is the most consequential upgrade to UK deposit safety in a generation. The Prudential Regulation Authority (PRA) published its final rules in Policy Statement PS24/25 on 18 November 2025, confirming the new limit of £120,000 per eligible depositor, per banking licence, effective for any firm failure occurring on or after 1 December 2025. The previous limit of £85,000 had been in place since January 2017.

The PRA had initially floated a rise to £110,000 in its March 2025 consultation paper, but revised this upward to £120,000 following consultation feedback and updated inflation data. The result is a more meaningful buffer than most commentary has acknowledged.

Standard deposit protection: £120,000 per person, per banking licence (up from £85,000)
Temporary High Balance protection: up to £1.4 million for up to six months, covering qualifying life events (up from £1 million)
Disclosure deadline for firms: deposit takers had until 31 May 2026 to update customer-facing materials under the PRA's transitional provisions

For a couple holding joint savings, the implications are immediate: a joint account held with a single institution now receives up to £240,000 in FSCS protection (£120,000 per person), provided the account is structured correctly.

The Licence Trap: Why Spreading Across Brands Offers No Extra Protection

The single most dangerous misconception among savers with large cash balances is that moving money between well-known bank brands automatically multiplies protection. It does not and the reason is that FSCS protection attaches to the banking licence, not the trading name.

Multiple brands operating under one licence share a single £120,000 cap. Savers who split £200,000 across two brands sharing a licence are no better protected than if they had left the entire sum in one place.

Key examples of shared licences in 2026

Halifax and Bank of Scotland share a single FSCS licence. A saver with £80,000 at Halifax and £80,000 at Bank of Scotland holds £160,000 under one licence £40,000 above the protected threshold.
Marcus by Goldman Sachs, Saga Savings (where accounts are provided by Goldman Sachs International Bank) and Goldman Sachs International Bank itself operate under the same licence. The combined eligible balance across all three is subject to the single £120,000 limit.
Lloyds Bank holds its own separate licence (shared with Scottish Widows Bank and MBNA), meaning it does offer genuinely separate protection from Halifax a distinction savers frequently miss.

Before distributing cash across institutions, savers should verify licence arrangements using the FSCS's own protection checker or the Financial Services Register at the FCA. Assume nothing from a brand name alone.

The Temporary High Balance Lifeline: Up to £1.4 Million

For savers who find themselves temporarily holding well above £120,000 following a property sale, inheritance, redundancy payment, divorce settlement or personal injury compensation the FSCS Temporary High Balance (THB) provision offers a critical short-term safety net.

As of 1 December 2025, the THB limit rose from £1 million to £1.4 million per person, covering eligible balances for up to six months from the date the funds become legally yours. Crucially:

The clock starts when funds land in your account or become legally yours — it does not reset if you transfer the money to another account
The property transaction must relate to your main residence; buy-to-let and second homes do not qualify
For joint accounts, each account holder receives up to £1.4 million in THB protection independently
Protection for personal injury claims is effectively unlimited in amount

For a recently widowed retiree or a homeowner who has just completed a sale and is waiting to buy, this provision is invaluable but the six-month window demands a plan. Anyone in this position should treat the THB as a runway, not a permanent solution, and begin redistributing cash across separate banking licences before the period expires.

The EU's €100,000 Ceiling: A Persistent Protection Gap

While the UK's new £120,000 limit now exceeds the EU standard, the European deposit guarantee framework underwent its own landmark reform in spring 2026 — though the headline cap remains unchanged.

On 26 March 2026, the European Parliament formally adopted Directive (EU) 2026/804 the revised Deposit Guarantee Schemes Directive (DGSD II) as part of the wider Crisis Management and Deposit Insurance (CMDI) reform package. The legislation was published in the Official Journal on 20 April 2026 and entered into force on 10 May 2026, with Member States having until May 2028 to transpose most provisions into national law.

The core guarantee of €100,000 per depositor, per credit institution remains fixed. However, DGSD II introduces meaningful enhancements:

Temporary high balance protection for deposits linked to real estate transactions and certain life events: protection of up to €500,000 for a minimum of three months and up to twelve months
Faster reimbursement: schemes must credit most covered deposits within three working days by 2030, reduced from the current seven-day standard
Broader application of resolution tools to small and medium-sized banks deemed to be in the public interest

For UK savers with accounts in EU member states or for EU citizens holding deposits in the UK the divergence matters practically. A UK saver with €150,000 in a single French or German bank is exposed for €50,000 above the guarantee, whereas the same balance held in a UK bank (assuming sterling equivalent) now has only £30,000 unprotected. The European Banking Authority reported in its most recent data release that EU deposit guarantee scheme funds have collectively reached €79 billion, indicating the schemes are better capitalised than at any point since the Directive's introduction but the €100,000 limit itself has not moved since 2010.

How UK Savers Should Spread Their Cash in 2026: A Practical Framework

The combination of the new £120,000 limit and the rules on shared licences creates a clear, actionable framework for protecting large cash balances.

Identify distinct banking licences, not brands. Use the FSCS protection checker or FCA register before opening accounts. Confirm that each institution you use holds its own separate authorisation.
Cap each institution at £120,000 per person. For couples, that means up to £240,000 per joint banking relationship — but only if both are named account holders.
Use the THB window strategically. If a life event has landed a large lump sum in your account, begin the redistribution process immediately. Do not rely on six months' protection as if it were permanent.
Revisit your arrangements annually. Licences can change through mergers and acquisitions what was a separate institution one year may share a licence the next.
For EU-domiciled or cross-border deposits: apply the €100,000 per institution rule and spread accordingly, noting that DGSD II's enhanced temporary protections for property and life-event balances begin to take effect as member states transpose by May 2028.

Frequently Asked Questions

Is the FSCS deposit protection limit now £120,000 or £110,000?

It is £120,000. The £110,000 figure was the PRA's initial consultation proposal from March 2025. The final confirmed limit set by the Bank of England's Prudential Regulation Authority in PS24/25 is £120,000 per eligible person, per banking licence, and took effect on 1 December 2025.

How much savings are protected if I have accounts with both Halifax and Bank of Scotland?

Only £120,000 in total across both accounts, because Halifax and Bank of Scotland share a single FSCS banking licence. Holding £80,000 in each gives you £160,000 across those two brands but £40,000 of that would be unprotected if the institution failed.

Does the EU deposit guarantee scheme offer the same level of protection as the UK's FSCS?

No. The EU's harmonised limit under the Deposit Guarantee Schemes Directive is €100,000 per depositor, per credit institution a ceiling unchanged since 2010. The UK's FSCS now provides £120,000, which, at current exchange rates, is materially higher. Expats or cross-border savers holding large balances in EU banks must split deposits across more institutions to achieve equivalent coverage.

What happens to my savings if I have just sold my house and have more than £120,000 in one account?

The FSCS Temporary High Balance provision covers qualifying proceeds including residential property sales up to £1.4 million for six months from when the funds arrive in your account. This protection does not restart if you transfer the money; the six-month clock runs from the original receipt date. Use this window to redistribute funds across separate banking licences before the cover expires.