PRA Raises FSCS Deposit Limit to £120,000 Starting December 1
Starting December 1, UK bank customers will see a significant increase in deposit protection. The Prudential Regulation Authority (PRA) has confirmed that the Financial Services Compensation Scheme (FSCS) deposit protection limit will rise to £120,000. This change increases the previous limit of £85,000, established in 2017, and is a response to public consultation and recent inflation data.
PRA’s Commitment to Financial Confidence
Sam Woods, Deputy Governor for Prudential Regulation at the Bank of England and CEO of the PRA, remarked that this change aims to bolster public confidence in the safety of depositors’ funds. “This increase to £120,000 ensures depositors are protected in case of bank failures,” Woods stated.
Consumer Reactions
Support for the new limit is echoed by various industry leaders. Martyn Beauchamp, CEO of the FSCS, emphasized that the rise underscores the importance of consumer trust in financial services. He mentioned, “This enhanced protection allows consumers to feel secure with their money.”
Rocio Concha, Director of Policy and Advocacy at Which?, noted that the increase is vital for reinforcing consumer confidence in the financial services sector. She stated that strong protections should not conflict with economic growth aspirations.
Temporary High Balance Claims Increase
On the same day, December 1, the limit for certain temporary high balance claims will also go up. This increase will raise the maximum from £1 million to £1.4 million. Such claims typically arise from life events like property transactions or insurance payouts.
Updated Communication Standards
To ensure clarity for depositors, the PRA has revised the FSCS disclosure materials. Financial institutions are required to update their communication methods, including information sheets and in-branch displays, by the end of May 2026.
Background and Future Steps
The PRA’s decision aligns with its mandate to regularly review and adjust regulatory thresholds to fit today’s financial landscape. Eligible deposits are protected per depositor at each PRA-authorized institution, reflecting a structured approach to maintaining financial stability.
- Previous Limit: £85,000 (set in 2017)
- New Limit: £120,000 (effective December 1)
- Temporary High Balance Limit: Increased from £1 million to £1.4 million
In conclusion, the PRA’s update to the deposit protection limit and related policies signifies a robust response to evolving economic conditions. It aims to enhance consumer confidence while ensuring the integrity of financial protections. These changes will play a crucial role in assuring depositors about the safety of their funds in the UK financial system.
