FSCS Protection Explained: £120,000 for Savings, £85,000 for Investments

What the FSCS is

The Financial Services Compensation Scheme is the UK’s fund of last resort for customers of financial firms. It was set up under the Financial Services and Markets Act 2000 and is paid for by levies on authorised firms rather than by taxpayers; the FSCS’s May 2026 forecast put the levy for 2026/27 at £247 million. It steps in when a firm authorised by the Prudential Regulation Authority or the Financial Conduct Authority fails and cannot pay what it owes its customers. Claiming is free, and when a bank fails the FSCS usually pays out automatically. How much it pays, and whether it pays at all, depends on the type of product, which is where most of the confusion lies.

The limits at a glance

• Bank, building society and credit union deposits, including cash ISAs: up to £120,000 per person per authorised firm, for failures on or after 1 December 2025. Joint accounts are covered up to £120,000 for each holder.
• Temporary high balances: up to £1.4 million for up to six months after certain life events, such as selling a home or receiving an inheritance or an insurance payout.
• Investments, including stocks and shares ISAs, general investment accounts and SIPPs: up to £85,000 per person per firm.
• Pensions from UK insurers, annuities, life insurance and investment bonds: 100% of the claim, with no upper limit.
• Most general insurance: 90% of the claim; compulsory cover, such as third-party motor insurance: 100%.

Why savings and investments have different limits

Until the end of November 2025, the limit was £85,000 for both. The Prudential Regulation Authority then raised the deposit limit to £120,000, noting that £85,000 in January 2017 was worth about £116,770 at September 2025 prices. The FCA, which sets the investment limit, did not follow, and was reported in July 2026 to regard the existing limits as appropriate while keeping them under review. So a broker or platform that describes itself as ‘FSCS-protected’ means up to £85,000 if the firm fails and something is missing, not £120,000. Adjusted for inflation in the same way, the investment limit, set in April 2019, would be roughly £110,000.

Savings: per banking licence, not per brand

Deposit protection applies per banking licence, not per brand. Several familiar names can share one licence, as HSBC and first direct do, and money held across brands that share a licence shares one £120,000 limit. Your bank’s FSCS information sheet shows which brands are covered together. The FSCS aims to pay deposit compensation within seven days of a bank failing, although more complex cases take longer. Savers with more than £120,000 often spread it across banks with different licences, or rely on the temporary high balance protection after a one-off event.

Investments: what the £85,000 actually covers

For investments, the FSCS pays in two situations: when an authorised firm fails and does not have all the money or assets it held for you, and when a firm owes you compensation for bad advice or poor management of your money but cannot pay. It does not cover money lost because markets fell or an investment performed badly. In most platform failures the first line of protection is not the FSCS at all. FCA client asset rules require firms to hold customers’ money and investments separately from their own, so when a platform fails an administrator works to return them, normally under a special administration regime. The FSCS then covers any shortfall up to £85,000, and can pay administrators’ costs that would otherwise be taken from clients’ assets.

The process can be slow. At WealthTek, special administration began in April 2023 and most eligible clients had been paid by May 2025, about two years later. At IBP Markets, which entered special administration in October 2023, about 80% of client holdings were returned in August 2024, with a court hearing on the rest set for November 2026. More recently, the FSCS declared the execution-only broker Logic Investments in default in April 2026, three months after it entered special administration, and is paying for clients’ holdings to be moved to a new broker. Clients usually cannot trade while their assets are frozen, which can matter as much as the compensation limit.

Pensions, ISAs and investment bonds

A SIPP is covered up to £85,000 if the operator fails and money is missing, or if you were given bad pension advice. Personal and stakeholder pensions provided by UK insurance companies, and annuities, are covered at 100% if the insurer fails. Workplace defined contribution schemes depend on how they are invested, and some providers point out that 100% cover for insured funds has yet to be tested in a large claim. Final salary pensions are not covered by the FSCS at all; the Pension Protection Fund exists for those. A cash ISA counts as a deposit and shares its £120,000 with your other savings under the same banking licence, while a stocks and shares ISA counts as an investment and shares its £85,000 with your other investments at the same firm. Investment bonds and other long-term insurance policies from UK insurers are covered at 100% if the insurer fails, although if a bond holds an external fund and that fund’s manager fails, there is generally no FSCS claim.

The FSCS protects you against a firm failing. It has never protected anyone against a market falling.

What the FSCS does not cover

• Crypto assets, and losses from trading CFDs or spread bets; if a CFD broker fails, the FSCS can help only if client money is missing.
• Firms that are not authorised by the FCA or PRA, including ‘boiler room’ scams and overseas firms selling into the UK without UK authorisation.
• E-money and payment accounts, whose providers must instead safeguard customers’ money in separate accounts under stricter FCA rules that took effect on 7 May 2026. Revolut, long the best-known example, received a full UK banking licence in March 2026 and has been moving customers to bank accounts covered up to £120,000.
• Deposits held in branches of UK banks in other European countries, which lost FSCS cover after Brexit and rely on the local scheme.
• Ordinary investment losses, poor performance and decisions you made yourself.

How to stay inside the protection

A few habits help. Check the FCA register before handing money to any firm, and confirm which legal entity holds your account. Keep savings with any one banking licence at or below £120,000 unless you are within a temporary high balance period. Remember that everything you hold with one investment platform shares a single £85,000 limit, which matters more for large pension pots than for small ISAs, although client asset rules mean a shortfall, when one happens, is usually partial. The FSCS website has a free checker for products and firms. This article is general education, not financial advice.

This article is educational and general in nature. It isn’t personalized investment, tax, or legal advice — always weigh your own circumstances, or talk to a licensed professional, before making financial decisions.

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