The limit for the Financial Services Compensation Scheme (FSCS) will rise to £120,000 from December 1, the Prudential Regulation Authority (PRA) confirmed today.
The limit, currently £85,000, is the maximum a financial services customer can be compensated per institution in the event of a company going bankrupt.
The increase to £120,000 is the first increase to the FSCS deposit limit since 2017.
FSCS chief executive Martyn Beauchamp said: “This increase ensures consumers can be confident that their money is safe, from the very first penny up to £120,000.”
A PRA consultation on the issue initially proposed a limit of £110,000, and this was increased by £10,000 to reflect the latest inflation figures and feedback from financial firms and experts.
The new limit applies automatically from December 1.
PRA chief executive Sam Woods said: “This change will help maintain public confidence in the safety of their money.
“It means savers will be protected up to £120,000 if their bank, building society or credit union fails. Public confidence underpins the strength of our financial system.”
The temporary high balance cover limit of £1 million will also rise to £1.4 million from 1 December.
Moneyfacts finance expert Rachel Springall said: “This is incredibly important for those who, through no fault of their own, are left holding significant balances from major life events, such as receiving a significant inheritance or holding cash from a house sale.
“Those who have the money stored in a current account would be wise to move it to a savings account, if they expect to hold it for more than six months to earn a better interest return. It is particularly important to spread the money across different UK authorized banks, building societies or credit unions to stay within the FSCS deposit protection limit.”
The FSCS first consulted about increasing the deposit limit in March 2025.