How is my money protected if my bank or building society fails?

Deposit protection is simple in principle and catches people out in one specific way: several familiar high street names operate under a single banking licence, and the protection limit applies per licence. Two accounts at what look like two different banks can therefore share one limit. The FSCS publishes a checker for exactly this reason.

Step by step

1. Find the current protection limit.Check the FSCS website for the current figure and the date it applies from. It is reviewed periodically, so a number quoted elsewhere may be out of date.
2. Check which licence each account sits under.Use the FSCS bank and savings protection checker. Enter the brand name and it tells you the authorised firm and which other brands share it.
3. Add up your balances per licence, not per brand.Current accounts, savings accounts and cash ISAs with the same authorised firm all count towards one limit.
4. Remember joint accounts count differently.A joint account is generally treated as each holder having an equal share, and each share is protected up to the limit for that person.
5. Know about the temporary high balance rule.Higher protection applies for a limited period to balances arising from defined life events such as a property sale, an inheritance or a redundancy payment. Check the current amount and period on the FSCS site.
6. Spread balances above the limit.Use separate authorised firms rather than separate brands. It is the simplest way to hold more than the limit safely.
7. Check that the provider is UK-authorised.Some app-based providers operate under a different arrangement or under another country's scheme. The FCA register and the provider's own terms say which applies.
8. Understand what is not deposit protection.E-money and payment institutions safeguard funds rather than being covered by FSCS deposit protection. Investments have a different FSCS limit and cover a different kind of failure.
9. Recheck after mergers.Banks combine licences from time to time, which can bring two previously separate balances under one limit without you doing anything.

Tips

• Use the FSCS checker rather than assuming. The list of brands sharing a licence is genuinely surprising.
• If you are between houses, look up the temporary high balance rule before the money lands — the protection is time-limited from receipt.
• Compensation is paid automatically for most deposit claims, so there is nothing to apply for in the ordinary case.

Common mistakes

• Counting brands instead of licences — Several familiar names share one authorised firm, so money split between them can still be over the limit.
• Assuming every app-based account has FSCS deposit protection — E-money providers safeguard funds in a different way. It is not necessarily worse, but it is not the same protection and it should be a conscious choice.

If it doesn't work

Questions people ask