FSCS Deposit Protection Explained

The FSCS is a non-profit independent organisation, originally set up by the UK Government, that protects customers if a UK-regulated financial services institution collapses. 

It does this by guaranteeing eligible deposits up to £120,000 per person, per bank. This means that, in the rare case a bank fails and can’t meet its obligations, any money you hold with that bank will be reimbursed up to the set limit. 

The FSCS covers all kinds of financial products, including pensions, investments and insurance policies (other financial products follow separate FSCS compensation rules). The easiest way to identify an FSCS-protected product is to look out for the FSCS protected badge.

• Eligible deposits up to £120,000 per person, per bank, as long as they’re held with financial institutions regulated by the Financial Conduct Authority (FCA) and/or the Prudential Regulation Authority (PRA).
• Temporary cover for eligible deposits up to £1.4 million in certain circumstances, such as if you’ve recently sold a property or inherited a large sum of money. 

• Deposits over £120,000. This limit applies to all deposits you hold with a bank and any of its subsidiaries or intermediaries (including banks operating under different trading names).
• Deposits held with unregulated financial institutions.
• Investments like stocks and shares or cryptocurrency (although the FSCS may cover deposits held in transaction accounts used to invest money, as long as the institution is UK-regulated).
• Deposits held with overseas financial institutions (although they’re often covered by the country of bank origin’s deposit guarantee scheme).

The FSCS charges an annual levy to authorised financial firms to fund any compensation, as well as their operating costs. This levy is based on extensive forecasting and trend analysis to predict how much the FSCS may need to pay out in a given year, with the recognition that certain events may lead to more or less compensation being paid out. 

To reduce reliance on the UK’s financial industry, the FSCS will attempt to recover money from failed firms or other third parties. The FSCS reinvests recovered funds into operating costs compensating customers, which allows them to potentially reduce the cost of the levy. 

Further listening and reading: 

• Mini-pod: How is FSCS funded - the Financial Services Compensation Scheme podcast
• How we are funded - Financial Services Compensation Scheme
• FSCS Protected Website Leaflet (PDF)

Yes. The Raisin UK Transaction Account is powered by ClearBank, a fully FCA-regulated UK institution. As such, eligible deposits up to £120,000 held in your Transaction Account are covered by the FSCS. 

It’s important to note that ClearBank provides services to other financial institutions. This means any other deposits you hold with ClearBank-powered services will reduce the amount of funds protected in your Transaction Account. You can view the full list of the banks using ClearBank services here.

Yes. We partner with UK-regulated banks to ensure all eligible deposits are protected by the FSCS, and that our customers are covered in the unlikely event of a bank collapsing. 

You can find full information about the protection offered with each product in the FSCS information sheet provided when you open a new product. 

It’s important to remember that the FSCS protection limit applies to all banks operating under a single banking licence, even if they appear to be separate entities. If you’re unsure, the FCA Firm Checker details which licence a bank operates under.

At present, we only offer savings accounts from UK-regulated banks. However, we have previously offered accounts from European banking entities and may do again in the future. In these instances, your funds are covered by the deposit guarantee scheme in the bank’s country of origin. Full information on the relevant deposit guarantee scheme is provided when you open a new savings account. 

Within the Raisin UK platform, we cap the amount you can deposit with a single bank based on the FSCS deposit protection limit. This includes banks operating under the same banking license (for instance, Whiteaway Laidlaw and Shawbrook). 

To help keep all of their money under the FSCS protection umbrella, some savers spread their money across multiple accounts with different institutions. This can prove something of an administrative burden, however, with multiple apps to manage and multiple passwords to remember. 

Raisin helps you keep this admin under control by collating all of your deposits in one easy-to-use dashboard, while offering the opportunity to compare and open savings accounts with a single application to ensure your money is earning a competitive rate. 

If a UK-regulated bank, building society or credit union fails, the FSCS typically reimburses eligible customers automatically up to the £120,000 per person, per bank limit. This includes banks you hold deposits with through a third-party service, such as Raisin UK. 

For other claims, such as insurance, mortgage, pension, PPI or investment products, you can submit a free claim via the FSCS website.

Bank failures are thankfully very rare in the UK. The most famous examples took place during the 2008 financial crisis, when Northern Rock and Bradford and Bingley failed (and HBOS and RBS were bailed out by the Government). A more recent high-profile case was the failure of Silicon Valley Bank UK. 

Still, it doesn’t hurt to be prepared for such an incident and arrange your finances accordingly. Below are examples of a scenario where all eligible deposits would be covered by the FSCS, and two where some eligible deposits would be lost. 

Scenario 1

Laura holds £100,000 in savings with Bank A, as well as a further £19,000 in a current account. Bank A runs into difficulties and fails, so the FSCS steps in to compensate customers. As Laura’s total eligible deposits are under the £120,000 protection limit, she receives all of her money back.

Scenario 2

Dave holds £200,000 in savings with Bank B, which later fails. Because Dave holds funds over the FSCS protection limit, he receives £120,000 in FSCS compensation while the remaining £80,000 is subject to the bank’s liquidation process.

Scenario 3 

Billy holds £90,000 with Bank C and £50,000 with Bank D. However, Billy doesn’t realise that Bank C and Bank D operate using the same banking licence, and therefore share the same FSCS protection limit. When the institution behind both banks fails, Billy receives £120,000 in FSCS compensation, with the other £20,000 subject to the bank’s liquidation process.

If you want to quickly and easily open savings accounts with FSCS deposit protection, register for a Raisin UK Account and log in to apply. Opening an account is free and simple, and once you’ve been approved, you can open easy access savings accounts, fixed rate bonds and notice accounts from over 40 of our partner banks.