The Prudential Regulation Authority (PRA) has confirmed that the Financial Services Compensation Scheme (FSCS) deposit protection limit will rise from £85,000 to £120,000 from 1 December 2025, in one of the most significant updates to depositor protection in recent years.
The new threshold places greater pressure on banks to update systems, validate data, and ensure audit readiness, aiming to strengthen consumer confidence, improve financial stability, and bring the UK closer in line with protection levels in other major economies.
The change follows a statutory requirement to review the FSCS limit at least every five years, taking into account inflation and economic conditions, with the updated amount reflecting increased savings levels and the need for stronger safeguards.
While the increase is widely welcomed as a boost for savers, the transition places additional operational and regulatory obligations on banks and building societies. Firms must ensure their systems, customer records, Single Customer View (SCV) files, and broader data governance processes are updated and fully compliant ahead of future audits. As the PRA noted, firms must be prepared to implement the changes swiftly and maintain accuracy under the Depositor Protection Rules as thresholds evolve.
The update also underscores the broader regulatory shift toward more resilient, data-driven protections across the UK financial sector. With future threshold adjustments likely, banks are expected to adopt more flexible and automated data validation processes to maintain compliance and reduce operational risk.
Matt Flenley, Head of Product & Marketing at Datactics, said: “The increase in FSCS protection to £120k is a great measure for consumers, but for banks it requires a re-evaluation of data practices in accordance with the new rules to update systems and ensure they are prepared for regular audits.”
“To support major banks, Datactics has our FSCS Digital Data Validation Sandbox, helping to achieve data readiness as regulations evolve. As part of this, it’s vital to have flexible, adaptable data systems to smoothly implement changes and updates. Streamlined data is critical for complying with the PRA’s Depositor Protection Rules, and with more thresholds due to change in future, having data readiness will help banks to stay audit-ready at all times, all while supporting confidence in the UK’s financial system.”
As the financial sector prepares for the new threshold to come into force in December, the update highlights the accelerating need for robust data governance, accurate customer records, and modernised systems capable of keeping pace with regulatory change.
Image provided by Datactics
