The Financial Services Compensation Scheme (FSCS) can compensate eligible customers when a financial firm fails and cannot meet claims against it. It does not guarantee investment returns, prevent trading losses or make every product sold by an authorised firm safe.
The distinction matters before you transfer money. A bank deposit, cash held through an investment platform and shares held by a broker can face different protection rules, even when they appear beside each other in the same app.
Current FSCS protection limits
As of 1 October 2026, the standard deposit limit is £120,000, following its increase on 1 December 2025. The investment compensation limit remains £85,000. The FSCS compensation limits by product category distinguish between these types of claim.
| Product or claim | Current protection | Main qualification |
|---|---|---|
| Eligible bank, building society and credit union deposits | Up to £120,000 per eligible person, per authorised firm | Balances sharing the same banking authorisation are combined |
| Qualifying temporary high balances | Usually up to £1.4 million for six months | Only qualifying events and balances receive this additional protection |
| Eligible investment claims | Up to £85,000 per eligible person, per failed firm | Not compensation for poor market performance |
| Eligible claims against a failed SIPP operator | Up to £85,000 per eligible person, per firm | Not a guarantee of the pension’s investment value |
| Eligible insurance claims | 100% or 90%, depending on the insurance category | Insurance rules differ from deposit and investment rules |
These figures are compensation limits, not automatic payouts. Earlier firm failures can fall under older limits.
What decides whether you are covered?
Protection depends on the customer, the legal firm, the activity involved and the reason money is owed. An investment claim generally requires a protected activity, an eligible claimant and a legal liability that the failed firm cannot meet. The FSCS eligibility rules make clear that authorisation alone does not settle whether a claim qualifies.
Legal liability means more than being disappointed with an outcome. A firm might owe compensation because it gave unsuitable advice or breached its obligations. A price falling after a properly executed purchase is a different matter.
Before opening an account, identify the company named in the customer agreement. Do not rely only on the trading name displayed above the login button. Ask which regulated activity the firm will perform and what would happen if that company failed.
Use the separate guide to checking a financial firm on the FCA Register for the verification process. Keep a copy of the agreement and the firm’s explanation of protection with your account records.
Deposit protection follows the authorised firm, not the account
Eligible current accounts, savings accounts and cash ISAs count towards the same deposit limit when they are held with one authorised deposit taker. Different banking brands can share that authorisation. The PRA’s rules on deposit coverage and shared banking brands explain why opening another account does not necessarily increase protection.
Consider a hypothetical customer with £80,000 under one banking brand and £60,000 under another. If both belong to the same authorised deposit taker, the combined balance is £140,000. Without qualifying temporary high balance protection, £20,000 sits above the standard limit.
Spreading that money across separately authorised deposit takers changes the calculation. Simply spreading it across different apps does not.
Joint accounts use each holder’s allowance
Two eligible holders can have up to £240,000 protected in a joint account, but each person’s other deposits with the same authorised firm still matter.
Suppose two people have equal shares in a £200,000 joint account. Each has £100,000 attributed to them. If one also holds £40,000 individually with that deposit taker, their combined amount is £140,000, leaving £20,000 above their standard allowance. The other holder remains within theirs.
For an overseas banking arrangement, check the establishment holding the deposit and the applicable scheme. A familiar UK brand does not establish that an account booked abroad receives UK deposit protection.
Temporary high balances need evidence
Money received through certain major life events can receive additional protection. Qualifying examples include proceeds from selling your main home and an inheritance. In most cases, the FSCS temporary high balance rules provide protection up to £1.4 million for six months. Certain personal injury, disability and incapacity payments can receive unlimited protection.
This is not an allowance available whenever a balance happens to be large. The event, amount and timing must qualify. A second home sale does not qualify under the main residence provision.
Keep completion statements, estate documents or other evidence showing where the money came from and when it became legally transferable or was first credited. Moving qualifying money between accounts does not restart the six month period.
If you expect to retain a large balance beyond that period, review its allocation before protection expires rather than treating the temporary allowance as permanent.
Investment protection does not cover market losses
For current eligible investment claims, FSCS can pay up to £85,000 per person, per failed firm. It cannot accept claims simply because investments performed poorly. The FSCS investment compensation rules separate losses caused by potentially compensable failures from ordinary investment risk.
If a £50,000 share portfolio falls to £35,000 because its holdings decline, that £15,000 market loss is not an FSCS claim. The same principle applies to money lost on an otherwise properly handled trade. Regulation is not an insurance policy against choosing the wrong direction.
A potentially covered situation is different: an authorised firm fails after conduct that leaves it legally liable to you. That might involve unsuitable investment advice or a failure to safeguard assets. Eligibility still requires assessment; neither an allegation nor the firm’s insolvency guarantees compensation.
Opening several investment accounts with the same legal firm does not create a fresh £85,000 allowance for each account. Keep the distinction between account labels and the firm against which a claim would arise.
A portfolio above £85,000 is not automatically lost in a broker failure
The compensation ceiling is not a ceiling on assets that can be returned. Under the FCA rules for holding client assets, firms within scope must protect customers’ ownership rights, including during insolvency, and maintain arrangements intended to reduce losses from misuse, fraud and poor administration.
That creates a separate route from compensation: returning or transferring assets that remain properly held for customers.
For example, a hypothetical £200,000 portfolio does not become an £85,000 portfolio simply because its broker fails. If the holdings remain intact and can be transferred, their return is not restricted to the compensation limit. Conversely, missing assets, disputed ownership or a compensable shortfall can require a different assessment.
Asset return can also take time. Do not assume that protection means uninterrupted access, or that FSCS will automatically pay every administration charge. The guide to client money, asset custody and broker failure covers those arrangements in more detail.
Cash on an investment platform needs a separate check
An account balance labelled “cash” does not tell you which firm’s failure is insured against. Establish whether money is held as a bank deposit, held as client money or invested in a fund.
If an underlying bank fails, deposit protection may apply to eligible customers whose money is held through a platform. FSCS may look through an appropriate trust arrangement to the underlying beneficiaries. The FSCS guidance on deposits held through platforms and client accounts also explains that direct and beneficial holdings at the same bank can share one allowance.
Suppose you have £100,000 directly with a bank and another £40,000 attributed to you there through a platform. Assuming both amounts count towards your deposit protection, the combined figure is £140,000, not two separately protected balances.
If the platform itself fails, the relevant question instead concerns its obligations to you and whether an eligible investment claim arises. The £120,000 deposit limit and £85,000 investment limit are not interchangeable.
Ask the platform to identify its banking partners and explain how your money is allocated. Retain that information alongside your direct savings balances.
Other situations where FSCS protection may not apply
Mini-bonds and unprotected investment products
A product can look like a savings account without being a protected deposit. Mini-bonds generally involve lending money to an issuer, and there is normally no FSCS protection if that issuer cannot repay. The FCA’s mini-bond protection guidance distinguishes issuer failure from a separate complaint about an authorised adviser or investment manager.
That distinction prevents two mistakes. Buying through an authorised intermediary does not automatically insure the issuer’s promise. Yet an unprotected product does not necessarily rule out a separate eligible claim concerning unsuitable regulated advice.
Words such as “secured”, “fixed return” or “asset backed” should prompt further questions, not replace them. Ask who owes you money and what legal claim you would have if they stopped paying.
E-money and payment accounts
If a non-bank payment provider fails, its customers do not receive FSCS compensation for that provider’s failure. Electronic money institutions and authorised payment institutions instead use safeguarding arrangements. The FCA’s explanation of payment provider protections distinguishes safeguarding from deposit protection.
Safeguarding aims to protect customer funds, but repayment can be delayed and costs may reduce the amount returned. Protection if the bank holding safeguarded funds fails is a separate question from protection if the payment company fails. Check which event a provider’s explanation actually addresses.
Crypto registration
Registration under money laundering rules does not itself give a crypto customer FSCS protection. The FCA’s crypto registration and consumer protection guidance expressly separates those matters.
Do not treat “FCA registered” as equivalent to a protected investment account. Ask about the actual asset and service, rather than assuming that every activity performed by the business receives the same protection.
An ISA or pension label is not a universal guarantee
An account wrapper does not remove the need to identify what is held inside it. A cash ISA containing eligible deposits follows deposit rules. Investments in a stocks and shares ISA remain exposed to market losses.
Pensions also require more than one number. An eligible claim against a failed SIPP operator differs from protection for an insurance based pension. The table above separates those categories; do not assume every pension receives either unlimited cover or a single £85,000 guarantee.
What to do if a firm fails
Start by establishing the firm’s status and locating genuine communications from FSCS or the appointed insolvency practitioner. A frozen account or unanswered message does not, by itself, prove that FSCS compensation is available.
The FCA’s process for claiming after a financial firm fails sets out the route through the firm, its insolvency practitioner and FSCS. Direct FSCS claims are free. You do not have to employ a claims management company and surrender part of any compensation as its fee.
Standard eligible deposit repayments are normally arranged automatically. Investment cases can require an application or instructions issued for that particular failure. Check the relevant notice rather than assuming that every type of claim follows the bank repayment process.
Prepare account statements, agreements, advice reports and correspondence showing what happened. Keep copies outside the provider’s app so that losing account access does not also mean losing your records.
If the firm is still trading, a complaint is generally the starting point, not an FSCS application. The separate guide to complaining about a broker or investment firm covers that route.
Check the protection before transferring money
Before funding an account, write down four things: the legal firm you are dealing with, the product you will hold, the failure that protection addresses and the other balances sharing its compensation allowance.
Ask for written answers where the arrangement is unclear. A useful explanation should identify the company and the circumstances covered, not repeat a headline limit. Assess the investment risk separately: compensation protection is a safeguard against certain failures, not a reason to accept a trade or product you would otherwise reject.