When banks fail, it’s not just a historical lesson—it’s a reminder that we need to protect ourselves. The 2008 financial crisis saw banks collapse, and some were bailed out by taxpayers. Fast forward to 2023, and the swift intervention to rescue Silicon Valley Bank UK was a stark reminder that even in 2023, financial instability can strike unexpectedly. This is why it’s more important than ever for savers to ensure their money is protected.
The FSCS protects 100% of the first £85,000 you have saved, per UK-regulated financial institution (not per account).
The UK has a system in place to keep your savings safe: the Financial Services Compensation Scheme (FSCS). Here’s how it works:
What is the FSCS?
The FSCS is the UK’s safety net for your savings. If a bank or financial institution regulated in the UK goes bust, the FSCS will compensate you for the money you’ve lost (up to a certain limit). Specifically, the FSCS guarantees 100% protection for the first £85,000 of your savings per UK-regulated financial institution (not per account). So, if your bank fails, the FSCS aims to get you back your money within seven working days, as long as your savings are under the £85,000 threshold.
To find out if your bank is covered by the FSCS, use their online checker tool. Simply search for your bank’s name, ensuring you match it exactly as listed on the bank’s own website. Also, double-check that the bank’s FRN number (Financial Services Register number) aligns with the one listed on the Financial Conduct Authority’s register.
What to watch out for:
If your bank is part of a larger group, protection could be spread across different brands or subsidiaries. To avoid confusion, use the Which banks are linked? tool to find out if your bank is part of a group with other brands that might affect your coverage.
Additionally, some savings accounts in the UK might not be regulated in the UK, which means they won’t be covered by the FSCS. So, it’s important to check whether your savings are with a UK-regulated institution.
Types of savings covered by the FSCS:
The FSCS protects a variety of savings products, provided they are with a UK-regulated institution. These include:
- Current accounts
- Savings accounts, including sharia-compliant accounts
- Cash ISAs, including Cash Lifetime ISAs and Help to Buy ISAs
- Small business accounts
- Certain guaranteed equity bonds
- Some ‘deposit accounts’ where interest is tied to stock market performance
- Cash held within SIPPs (Self-Invested Personal Pensions), although you should check with your provider to confirm which bank is holding your cash, especially if you have multiple accounts linked to other banks.
Additionally, pensions, life assurance, insurance premiums, and investment funds might also be covered, depending on how they are structured. If you’re unsure about the details, check our guide on FSCS protection for pensions and investments, or read the quick questions section below for an overview.
Final thoughts:
With the risk of financial instability still a reality, protecting your savings is crucial. Always check that your bank and savings accounts are covered by the FSCS, and remember that £85,000 of your savings could be at risk if your bank isn’t protected. If you’re unsure about your coverage or how to check it, use the FSCS tools available or reach out to your bank for clarification. It’s always better to be informed and safe than to risk losing your hard-earned savings.
How to Save in 100% Safety
For truly safe savings, there are several strategies, including some accounts offering 100% protection beyond the usual limits. However, these often come with lower interest rates. The key rule for most savers is…
Spread Your Savings
Under £85,000: If your savings are under £85,000, you’re fully protected by the FSCS. However, it’s still wise to spread your savings across different accounts. This not only protects you, but follows the old adage “don’t put all your eggs in one basket.”
Over £85,000: For larger amounts, the rule is clear—don’t keep more than £85,000 with any one financial institution. Split your savings across multiple accounts and check they are separate institutions to ensure full coverage.
Very Large Amounts: If you have substantial savings, consider seeking professional advice on how to best spread your money across accounts. Our guide to managing large savings can help.
For the best interest rates, check our Top Savings Accounts guide for high-yield options.
100% Safe Ways to Save
If you’re looking for the safest options, here are some top picks:
- National Savings and Investments (NS&I): Fully backed by the UK government, NS&I offers a range of savings accounts and products with near 100% safety. Its most popular product, Premium Bonds, has a £50,000 limit, but it also offers easy-access and fixed-term accounts with competitive rates, such as:
- Direct Saver: 3.75% (3.5% from Dec 2024)
- Income Bond: 3.75% (3.49% from Dec 2024)
- Guaranteed Growth Bonds: 3.6% (for 2 years)
- Guaranteed Income Bonds: 3.6% (for 2 years)
Although NS&I’s rates are good, they may be lower than other options, so see our Top Savings guide for more.
- Repay Debts: Paying off high-interest credit cards or loans with your savings can be a smart move. The interest you save could be more than the interest you earn on your savings.
- Overpay Your Mortgage: Overpaying on a mortgage can be a way to “earn” interest by reducing your debt. For instance, paying off a 4% mortgage is similar to earning that amount on savings after tax. Plus, it could help you secure a better deal at remortgage time.
