We are responsible for oversight of, and rules relating to, the Financial Services Compensation Scheme (FSCS) in respect of deposit and insurance policy protection. These rules are set out in the PRA Rulebook.
A memorandum of understanding between the FSCS and the Bank of England (exercising its prudential regulation functions) sets out how we work together. This updated MoU was published on 15 July 2022.
Memorandum of Understanding between the FSCS and Bank of England
11 October 2023: We published CP22/23 – Occasional consultation paper – October 2023, which included a proposal in Chapter 2 to amend the Depositor Protection Part of the PRA Rulebook to facilitate the ability of the FSCS to pay compensation to eligible depositors of insolvent deposit takers via electronic transfer. That element of the consultation paper is relevant to the FSCS and of interest to deposit-taking firms and depositors. The consultation closes on 13 November 2023.
14 September 2023: We published PS12/23 - Dealing with insurers in financial difficulties which set out the PRA’s final rules and policy in respect of amendments introduced by the Financial Service and Markets Act 2023 to the Financial Service and Markets Act 2000, particularly in relation to the ‘write-down’ of insurance contracts. The PS is relevant to PRA-authorised insurers (other than friendly societies) with a Part 4A permission. The new rules came into effect on 19 September 2023.
30 June 2023: We published PS7/23 - Depositor Protection which provides the PRA’s response to the final part of the representation to CP9/22 – Depositor Protection. It covers a number of changes to the depositor protection rules and is relevant to all PRA-authorised credit institutions and credit unions. The amendments to the DP rules, SS18/15, SoP – Deposit Guarantee Scheme and SoP – Calculating Risk-based Levies came into effect on 1 July 2023.
31 March 2023: We published PS3/23 – Financial Services Compensation Scheme – Management Expenses Levy Limit 2023/24. This PS is relevant to all PRA and FCA authorised firms but contains no material of direct relevance to retail financial services consumers or consumer groups upon which they might need to act. The FSCS MELL will apply for the financial year ending Sunday 31 March 2024.
31 March 2023: We published PS2/23 - Depositor Protection which provides feedback to part of the responses to CP9/22 – Depositor Protection. It also contains the PRA’s final rules concerning the relevant amendments to the Depositor Protection Part of the PRA Rulebook. The amendments clarify that the FSCS depositor protection regime covers FSCS eligible customers of e-money institutions, authorised payment institutions, small payment institutions, and credit unions should a credit institution holding such firms’ safeguarded funds fail. The changes to DP 6.2 and consequential changes to the rules came into effect on 12 March 2023.
8 February 2023: We published CP3/23 - Dealing with insurers in financial difficulties which set out the Prudential Regulation Authority’s (PRA) proposed rules and policy in respect of the changes introduced by the Financial Service and Markets Bill 2022-23 to the Financial Service and Markets Act 2000 concerning insurers in financial difficulties. This CP is relevant to all PRA-authorised insurers (other than friendly societies) with a Part 4A permission. The consultation closed on 31 March 2023.
12 January 2023: Jointly with the FCA, we published CP1/23 - Financial Services Compensation Scheme – Management Expenses Levy Limit 2023/24. This CP is relevant to all FCA and PRA authorised firms. This consultation closed on Thursday 9 February 2023.
28 November 2022: We published PS10/22 – Depositor Protection which provides feedback to the response to CP9/22 ‘Depositor Protection’. It also confirms the PRA’s final amendments to the Depositor Protection Part of the PRA Rulebook, the deletion of the Dormant Account Scheme Part of the PRA Rulebook, and the deletion of the Dormant Account Scheme Statement of Policy. The changes to the COA Rules and DAS Rules came into effect on 30 November 2022. The DAS SoP was deleted on the 30 November 2022. The consequential changes to SS18/15 to reflect the changes introduced by these rules came into effect on 1 July 2023.
23 September 2022: We published CP9/22 - Depositor Protection which set out the PRA's proposals to amend the Depositor Protection Part of the PRA Rulebook (DP), delete the Dormant Account Scheme Part of the PRA Rulebook, and make minor amendments to the PRA’s supervisory statement (SS)18/15 on ‘Depositor and dormant account protection’ (SS18/15), the PRA’s Statement of Policy on ‘Deposit Guarantee Schemes’ (SoP – DGS), and the PRA’s SoP on ‘Calculating Risk-Based Levies for the Financial Services Compensation Scheme deposits class’ (‘SoP – RBL’). The consultation period for the Continuity of Access Rules and Dormant Account Scheme proposals closed on Friday 21 October 2022. The consultation period for the remaining proposals closed on Friday 16 December 2022.
25 March 2022: We published PS3/22 ‘Financial Service Compensation Scheme – Management Expenses Levy Limit 2022/23’. This PS is relevant to all PRA-authorised firms, but contains no material of direct relevance to retail financial services consumers or consumer groups upon which they might need to act. The FSCS MELL applies for the financial year ending Friday 31 March 2023.
12 January 2022: Jointly with the FCA we published CP1/22 ‘Financial Services Compensation Scheme – Management Expenses Levy Limit 2022/23’. This CP is relevant to all FCA and PRA authorised firms. This consultation closed on Monday 14 February 2022.
14 April 2021: The PRA and FCA published a joint letter to banks and building societies on obtaining deposits via deposit aggregators. This letter highlights the risks associated with the increasing volumes of deposits that are placed with banks and building societies via deposit aggregators, and how to mitigate them.
26 March 2021: We published PS5/21 ‘Financial Service Compensation Scheme – Management Expenses Levy Limit 2021/22’. This PS is relevant to all PRA-authorised firms, but contains no material of direct relevance to retail financial services consumers or consumer groups upon which they might need to act. The FSCS MELL applies for the financial year ending Thursday 31 March 2022.
24 March 2021: We published PS4/21 ‘Depositor protection: Identity verification’. This PS is relevant to the Financial Services Compensation Scheme (FSCS), all PRA-authorised deposit takers, and insolvency practitioners (IPs). The changes outlined in this PS took effect on Monday 29 March 2021.
22 January 2021: Jointly with the FCA we published CP4/21 ‘Financial Services Compensation Scheme – Management Expenses Levy Limit 2021/22’. This CP is relevant to all FCA and PRA authorised firms. This consultation closed on Friday 19 February 2021.
20 January 2021: We published CP3/21 ‘Depositor protection: Identity verification’. This CP is relevant to the Financial Services Compensation Scheme, all PRA-authorised deposit-takers, and insolvency practitioners. This consultation closed on Monday 15 February 2021.
28 December 2020: Jointly with the Bank of England, we published Policy Statement (PS) 30/20 ‘UK withdrawal from the EU: Changes before the end of the transition period’. This PS provides the final policy to Consultation Paper (CP) 13/20 ‘UK withdrawal from the EU: Changes before the end of the transition period’ and CP18/19 ‘UK withdrawal from the EU: Changes following extension of Article 50’ and contains final PRA Rulebook EU Exit instrument, PRA transitional direction and related guidance documents, as well as an update to Supervisory Statement (SS) 18/15 ‘Depositor and dormant account protection’ , which became effective from 11pm Thursday 31 December 2020.
This PS is relevant to all firms authorised and regulated by the PRA. Some of the changes are also relevant to firms authorised and regulated by the Financial Conduct Authority (FCA), and to the Financial Services Compensation Scheme (FSCS). This PS and the accompanying materials may also be relevant to firms applying to the PRA or FCA for authorisation.
9 October 2020: We published PS21/20 ‘Extending policyholder protection for building guarantee policies’, which contained a rule change to extend policyholder protection for holders of building guarantee policies, amending the Policyholder Protection Part of the PRA Rulebook.
The rule change took effect on Thursday 8 October 2020.
4 August 2020: We published Policy Statement (PS) 19/20 ‘Financial Service Compensation Scheme – Temporary High Balance Coverage Extension’. The PS updated the following:
The rule change and updated SoP was effective from Thursday 6 August 2020. Coverage for THBs reverts to six months from Monday 1 February 2021.
9 July 2020: We published CP6/20 ‘Financial Service Compensation Scheme – Temporary High Balance Coverage Extension’. This CP is relevant to the FSCS and all PRA-authorised deposit-takers as well as retail financial consumers who are currently, or who may become, THB depositors before Monday 1 February 2021.
27 March 2020: We published PS8/20 ‘Financial Service Compensation Scheme – Management Expenses Levy Limit 2020/21. This PS is relevant to all PRA-authorised firms, but contains no material of direct relevance to retail financial services consumers or consumer groups upon which they might need to act. The FSCS MELL applies for the financial year ending Wednesday 31 March 2021.
31 January 2020: This page has been updated to describe the impact of the transition period for EU withdrawal on FSCS protection.
15 January 2020: The PRA and FCA published CP1/20 'Financial Services Compensation Scheme - Management Expenses Levy Limit 2020/21'. The CP sets out proposals for the Management Expenses Levy Limit (MELL) for the FSCS in 2020/21 and is relevant to all PRA- and FCA-authorised firms. This consultation closed on Monday 17 February 2020.
29 March: We published Policy Statement 10/19 'Financial Services Compensation Scheme – Management Expenses Levy Limit 2019/20’.
28 February: We published near-final policy to deliver the general approach being taken to ensure there is a functioning legal framework when the UK leaves the EU. This includes an update to Supervisory Statement 18/15 ‘Depositor and dormant account protection’.
18 January: The PRA and FCA published CP3/18 'Financial Services Compensation Scheme - Management Expenses Levy Limit 2018/19' - also see the FCA's website. The CP sets out proposals for the management expenses levy limit (MELL) for the FSCS.
The UK has now left the European Union. The information below has been updated to reflect how FSCS protection applies following the end of the transition period on 31 December 2020.
The PRA is responsible for rules relating to FSCS protection in respect of deposits and contracts of insurance. Please refer to the FCA for FSCS protection relating to other financial services products.
Customer deposits held by banks, building societies and credit unions (including in Northern Ireland) in UK establishments that are authorised by the PRA are protected by the FSCS up to £85,000. This includes, for example, eligible deposits in current accounts, savings accounts, cash ISAs (held with a deposit taker) or savings bonds.
The deposit protection limit applies to the total eligible deposits of each person, per PRA-authorised firm. So for deposits in a joint account, this means that each account holder is protected up to the deposit protection limit, ie the total protection adds up to two times £85,000.
A PRA-authorised firm may own several banking and building society brands. This means that anyone who has deposits in more than one account under a single brand, or multiple accounts under different brands owned by a single firm, is only protected up to a total of £85,000 across all these accounts.
There will be temporary deposit protection for up to 6 months above the £85,000 limit for certain types of deposits classified as temporary high balances, such as the proceeds from private property sales. Protection will be up to £1million in most cases.
People with eligible deposits that add up to more than the deposit protection limit may wish to take steps to keep their deposits fully protected (eg by splitting their deposits across different PRA-authorised firms).
In March 2023, we amended the rules in the Depositor Protection Part of the PRA rulebook to clarify the protection available to eligible customers of e-money institutions (EMI), authorised payment institutions or small payment institutions (together PI), and credit unions (in respect of e-money), if a credit institution holding such firms’ safeguarded funds were to fail. In the event of such a failure, each end customer would be considered against the eligibility requirements and eligible customers would be separately protected up to the £85,000 limit.
Lists of the banking and building society brands that share FSCS protection with other brands are available below. These show:
A PRA-authorised bank or building society may use several brands. This means that anyone who has deposits in more than one account under a single brand, or multiple accounts under different brands owned by a single firm, is only protected up to a total of £85,000 across all of these accounts.
Not all banks and building societies protected by the FSCS are included on these lists – the lists include only those brands which share FSCS depositor protection coverage with other brands. If your bank or building society does not appear on these lists, you can ask them directly how your money is protected or check the Financial Services Register. The ‘Which firms does the PRA regulate’ page includes lists of PRA-authorised banks and building societies which are updated monthly. Generally, following the UK’s withdrawal from the European Union, eligible depositors of PRA-authorised banks and building societies are protected by the FSCS if the firm holds their deposits in the UK (see below for further information).
Banks and building societies whose deposits are FSCS protected are also required to display FSCS posters at branches listing the brands that share protection, provide depositors with an annual information sheet describing protection, and include a statement regarding protection on depositor statements of account.
Depositors with eligible deposits held by UK establishments of firms with Part 4A permission to accept deposits (or deemed Part 4A permission under the Temporary Permission Regime (TPR) or Supervised Run-off Regime (SRO)) are protected by the FSCS.
Generally, deposits held outside of UK establishments are not protected by the FSCS.
Deposits held by UK firms’ branches in the EEA are no longer protected by the FSCS, but may be protected by the relevant EEA State’s deposit guarantee scheme depending upon the depositor protection regime in that EEA State.
Pending the finalisation of the UK’s proposed new relationship framework between the UK and Gibraltar (the Gibraltar Access Regime), customer deposits held by UK branches of Gibraltarian firms will continue to be protected by the Gibraltarian deposit guarantee scheme (subject to the Gibraltarian deposit guarantee scheme’s regulations). Eligible deposits held in Gibraltarian branches of UK firms will continue to be protected by the FSCS.
Prior to any changes being made to depositor protection for customers of Gibraltarian firms or Gibraltarian branches, a public consultation of PRA rules will be undertaken.
To be protected by the FSCS, insurance policyholders must have a protected insurance contract and be eligible to receive compensation.
To be protected, an insurance policy issued following the end of the transition period generally must:
Not all policyholders are eligible to claim compensation from the FSCS. For claims relating to general insurance, most private individuals and small businesses are eligible for protection. For long-term insurance most claimants, including large businesses, are eligible for protection.
Provided that the claim is a protected contract of insurance, there are no exclusions from eligibility for claims under insurance contracts that cover compulsory insurance
If, on and from 3 July 2015, an insurance firm has been declared in default and the FSCS is satisfied that a claim is protected and the claimant is eligible (in accordance with policyholder protection rules), the following compensation from the FSCS is available:
For general insurance, the FSCS must calculate the value of the firm’s liability to the claimant in accordance with the contract terms, and pay that amount, subject to any limits, to the claimant.
For long-term insurance, unless the FSCS is trying to secure continuity of cover, it must calculate the value of the firm’s liability to the claimant in accordance with the contract terms as valued in a liquidation of the insurer, or in the absence of this, in accordance with valuation techniques that the FSCS considers appropriate.
This may mean that policyholders will lose some of the value.
The PRA prepares lists of insurers authorised and operating in the UK. These lists are currently being updated.