Bank and Building Society Collapse Compensation
Published / Last Updated on 27/11/2024
Banks (owned by shareholders) and Building Societies (owned by borrower and saver members) are authorised by the Prudential Regulation Authority (PRA), part of the Bank of England, and granted a banking licence. Deposits made by people are protected in the event of collapse by the Financial Services Compensation Scheme (FSCS).
14 years ago, the FSCS compensation for cash deposits held with an authorised Bank/Building Society was £85,000. This was then reduced to £75,000 as the £ strengthened against the € to £75,000 (equivalent to EU compensation limit of €100,000). On 1 January 2017, following the EU Brexit Vote, the £ weakened and therefore the compensation limit was increased back to £85,000.
£85,000 is the current FSCS compensation limit for Bank/Building Society deposits.
This is limited to the following:
£85,000 per banking licence per person. If you have more than £85,000 deposited under one banking licence, you are only protected up to £85,000.
If you are a couple and you hold a joint names bank account, the maximum compensation then is £170,000 (£85,000 per person) per banking licence.
Banking Licence not Brand
Many banks and building societies have multiple ‘brands’ under one banking licence so, extreme care needs to be taken to double check that you have not exceeded £85,000 under the same banking licence.
For example:
- Yorkshire Building Society has 3 brands.
- Nottingham Building Society has 3 brands.
- Royal Bank of Scotland (RBS) has 7 brands.
- Lloyds Bank has 8 brands.
- Co-op Bank has 4 brands.
- Clydesdale Bank has 4 brands.
You must check each brand and which banking licence that is under to ensure you do not have more than £85,000 invested with say 2 brands but they are under the same banking licence.
Similar/Associated Brand Name Care Too
The Virgin One Account is a brand of RBS but Virgin Money is a brand of Clydesdale Bank. So technically, you could have more than £85,000 invested under the ‘Virgin’ brand but under 2 different banking licences.
Check Protection Now
- What does the FSCS cover? https://www.fscs.org.uk/what-we-cover/
- Bank of England https://www.bankofengland.co.uk/prudential-regulation/authorisations/financial-services-compensation-scheme
- Latest list of Building Society Licences and Brands https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/authorisations/which-firms-does-the-pra-regulate/2023/list-of-building-society-brands.pdf
- Latest list of Bank Licences and Brands https://www.bankofengland.co.uk/-/media/boe/files/prudential-regulation/authorisations/which-firms-does-the-pra-regulate/2023/list-of-banking-brands.pdf
