The Financial Services Compensation Scheme (FSCS) is the UK's official deposit protection scheme. It protects eligible deposits held with banks, building societies, and credit unions that are authorised by the PRA and regulated by the FCA.

If a regulated bank fails and cannot return your money, the FSCS compensates eligible customers up to £120,000 per person, per authorised institution. This protection applies automatically — you do not need to submit a claim in most cases.

FSCS only applies to firms that hold a full UK banking licence. Not all financial apps or money providers qualify, which is why it is important to understand whether your provider is a bank or an e-money institution.

The Financial Services Compensation Scheme (FSCS) exists to protect consumers and maintain confidence in the UK financial system. If an authorised bank, building society, or credit union becomes insolvent, the FSCS ensures eligible depositors do not lose protected savings.

By guaranteeing compensation up to £120,000 per person, per authorised bank, the scheme reduces the risk of panic withdrawals during financial stress. This protection plays a critical role in financial stability and prevents wider disruption to the banking system.

FSCS is funded by levies on authorised financial firms — not by taxpayers — and operates independently under UK financial regulation. Its purpose is simple: to provide a clear safety net so customers can hold money in regulated banks with confidence.

The FSCS protects eligible deposits up to £120,000 per person, per authorised bank. This means each individual has their own separate protection limit at each licensed institution.

For joint accounts, the limit applies to each named account holder. A two-person joint account can therefore be protected up to £240,000 in total (£120,000 per person).

The protection limit applies per authorised banking licence, not per brand. If two banking brands operate under the same licence, your combined deposits across both count toward a single £120,000 per-person limit.

If you hold more than £120,000 with one authorised bank, any amount above the limit may not be protected. Spreading large balances across separately licensed banks can reduce risk.

The limit resets for each authorised firm. For example, you could hold £120,000 with one UK bank and another £120,000 with a different licensed bank and remain fully protected at both.

Many UK digital banks hold a full UK banking licence and are covered by the Financial Services Compensation Scheme (FSCS). If they fail, eligible deposits are protected up to £120,000 per person, per authorised bank.

Examples of fully licensed digital banks include Monzo, Starling Bank, Atom Bank, Zopa Bank, Kroo, and Chase UK. These institutions operate in the same regulatory framework as traditional high-street banks.

However, not all app-based financial providers are banks. Some operate as e-money institutions rather than deposit-taking banks. These firms do not offer FSCS protection and instead use safeguarding to protect customer funds.

Safeguarding requires customer money to be held separately from company operating funds, but it does not provide the same statutory compensation guarantee as FSCS protection.

You can compare licensing status, FSCS coverage, savings features and fees in our digital banks comparison guide.

FSCS protection applies to fully authorised UK banks. If the bank fails, eligible deposits are protected up to £120,000 per person, per authorised firm. Compensation is automatic and typically paid within 7 working days.

Safeguarding is used by e-money institutions rather than banks. These firms must keep customer funds in separate, ring-fenced accounts with major banks so the money cannot be used for lending or operational expenses.

However, safeguarding is not the same as deposit protection. There is no £120,000 compensation guarantee under safeguarding. If an e-money firm fails, administrators return safeguarded funds, but the process may take longer and is not backed by the same statutory compensation scheme as FSCS.

This is why checking whether a provider holds a full UK banking licence — rather than operating as an e-money institution — is important if you plan to hold large balances.

If a UK bank with FSCS protection collapses, the Financial Services Compensation Scheme automatically steps in to protect eligible deposits up to £120,000 per person, per authorised bank.

In most cases, compensation is paid within 7 working days. The process is automatic — you do not need to submit a claim or contact the FSCS yourself.

The FSCS uses the bank’s own customer records to calculate protected balances. Funds are typically transferred directly into another account in your name or issued via cheque.

If you hold more than the protection limit at that institution, any amount above £120,000 may be at risk. This is why spreading large balances across separate authorised banks can reduce exposure.

Importantly, FSCS protection only applies to fully licensed UK banks. E-money institutions use safeguarding instead, which does not provide guaranteed compensation in the same way.

A joint account receives up to £120,000 protection per account holder, per authorised bank. This means a two-person joint account can be protected up to £240,000 in total at a fully licensed UK bank.

The protection limit applies individually. Each account holder is treated separately by the FSCS, so the cover is effectively doubled for two named individuals.

Importantly, each person also keeps their own £120,000 protection for personal accounts held at the same authorised bank. For example, if you hold £100,000 in a sole account and £120,000 in a joint account, both amounts can be fully protected.

However, the limit applies per authorised banking licence, not per brand. If two banking brands share the same licence, your total deposits across both count toward the same £120,000 per-person limit.

If you hold large balances across joint and personal accounts, it is wise to check the firm’s authorised status on the FCA Register to ensure you understand how your protection is structured.

Below is a quick summary of FSCS coverage for major UK digital banks. Some app-based banks operate under a full UK banking licence and are protected up to £120,000 per person, while others operate as e-money institutions and use safeguarding instead.

For a full breakdown of licensing status, savings features, fees, and protection levels, see our digital banks comparison guide.

Always double-check with the provider and the FCA register before depositing large sums.

Check the FCA Financial Services Register to confirm whether the firm has a UK banking licence.

Look for the phrase: 'This firm is authorised by the PRA and regulated by the FCA.'