Depositor protection schemes

After the financial crisis in 2008 it’s understandable that savers can still be nervous about the safety of their hard-earned cash. To prevent the financial collapse of a bank from having disastrous effects on your savings, banks and building societies offering their services to UK savers must be signed up to a depositor protection scheme, which safeguards the money in your bank account (up to a certain amount) against their financial troubles.

Most banks in the UK are licensed here in the UK, but some are EU banks that are operating under a ‘passport’ licence scheme, and will have different compensation rules. This passport scheme will still cover EU banks until the end of the Brexit transition period on 31 December 2020. Additionally, offshore banks and building societies operating in the crown dependencies of Gibraltar, Guernsey, Isle of Man and Jersey will have different compensation limits to that offered by the UK Financial Services Compensation Scheme. These are not affected by the UK leaving the EU.

To find out where your bank or building society is licensed, and what depositor protection guarantees you'll get if they go bust, we’ve compiled a list.

The depositor compensation schemes have different rules and limits in differing areas. You can find the relevant depositor compensation schemes by jurisdiction below.

Compensation limits are not payable for each savings account you have with a particular bank, but for the total amount you hold with them. It doesn't matter who your bank is owned by, but rather whether the banking licence is shared with other brands in the same group that will affect your compensation entitlement.

For example, in the UK, Halifax and Bank of Scotland are under the same banking licence, so you'll only be covered for £85,000 across the two brands under the terms of the Financial Services Compensation Scheme (or £150,000 for joint accounts). But NatWest and Royal Bank of Scotland, although both owned by RBS, have separate banking licences, so you would be covered by up to £85,000 for each bank.

Banks based outside the European Economic Area (EEA) that offer savings accounts in the UK can only do so through a UK subsidiary directly authorised by the Prudential Regulation Authority (PRA). Being directly authorised by the PRA also means that they come fully under the UK Financial Services Compensation Scheme which, as far as savers are concerned, means that they are the same as any other UK bank.

Banks regulated in other European Economic Area (EEA) member states can operate in the UK with limited UK regulation.

This is called 'passporting' and means that the banks are regulated by their home country's regulator and covered by its compensation scheme. Until the end of the Brexit Transition period which goes up to 31 December 2020, passporting is still a valid way of doing banking business in the UK from the EU. After this, all banks must be authorised in the UK to operate here, and so will be covered by the FSCS.

EU and EEA deposit protection is unified under the terms of the Deposit Guarantee Schemes Directive. This means there is a Europe-wide minimum of €100,000 protection per individual per bank.

With UK Financial Services Compensation Scheme there is an exception for temporary high balances. Examples might include funds received temporarily due to a dramatic life event, such as:

• Buying or selling a new property
• Equity release funds from your main residence
• Funds from an insurance policy
• Compensation from a personal injury claim or death
• State benefits for disability
• Compensation received for unfair dismissal or wrongful conviction
• Voluntary or compulsory redundancy
• Marriage, civil partnership, divorce or dissolution of civil partnership
• Retirement benefits received at retirement
• Benefits paid on death
• Inheritance
• Monies received from a deceased’s estate held by a personal representative

Temporary high balances are covered for 6 months from the date the money is deposited into the account. This should give enough time to redistribute the funds across banks to protect the full amount.

Other savings that are not covered by the protection scheme include any funds that are relevant to a conviction for money laundering, or where the account holder has not been identified by the bank or building society under the money laundering regulations.

The figures and details shown are obtained from sources believed to be reliable. The accuracy and completeness of any information cannot be guaranteed, however, and no warranty or representation is given. Due to the recent mergers and acquisitions in the finance sector individuals are advised to check specific conditions with individual banks and institutions as joint licence compensation limits can be dependent upon the dates when individual accounts are opened.