FSCS Protection and Electronic Money Safeguarding

Not all business bank accounts protect your money in the same way. Some accounts are held with UK-authorised banks and covered by the Financial Services Compensation Scheme. Others are provided by e-money institutions, where your money is safeguarded rather than FSCS protected. The difference matters, especially if your business holds a meaningful balance.

What is FSCS deposit protection?

FSCS protects eligible deposits held with UK-authorised banks, building societies and credit unions. If one of those firms fails and cannot repay your money, FSCS can step in and compensate eligible depositors automatically. From 1st December 2025, the standard protection limit is £120,000 per eligible depositor, per authorised firm.

For business accounts, this means your money may be protected if it is held with a UK-authorised deposit-taking institution and your business qualifies as an eligible depositor. FSCS generally protects company deposits regardless of company size, although most types of regulated financial services company are not eligible.

Does FSCS protection apply per account?

No. FSCS protection applies per eligible depositor, per authorised firm, not per account.

If your business holds a current account and a savings account with the same authorised bank, those balances are added together when calculating how much is protected. The £120,000 limit applies across everything held with that firm.

This also matters where different brands share a banking licence. If you hold money with two brands that are part of the same banking group, FSCS treats them as one bank. The limit applies to your combined balance across both, not separately to each brand.

Example: If your limited company holds £80,000 with one brand and £60,000 with another brand under the same banking licence, your total with that authorised firm is £140,000. The standard FSCS limit would not cover the full amount.

Checking the banking licence is just as important as checking the brand name.

FSCS protection for sole traders

Sole traders need to be particularly careful, because the business is not legally separate from the individual.

FSCS says that if you run your business as a sole trader, your personal and business accounts with the same failed bank would usually be added together. You would not normally get one £120,000 limit for your personal money and a separate £120,000 limit for your sole trader business account. You could claim up to £120,000 in total.

Example: If you are a sole trader with £70,000 in a personal savings account and £80,000 in a sole trader business current account, both with the same bank, your total balance is £150,000 with that firm. The standard FSCS limit would usually be £120,000, leaving £30,000 unprotected.

This is worth bearing in mind for freelancers, contractors and self-employed people who keep personal savings and business cash with the same provider.

FSCS protection for limited companies

Limited companies and LLPs are treated differently because they are separate legal entities.

FSCS says the business may be able to claim up to £120,000 for its business account, while the director may separately be able to claim up to £120,000 for a personal account held with the same failed bank. The company and the individual can be treated separately, because the company is a separate legal person.

Example: If you are a company director with £100,000 in your limited company's business current account and £90,000 in your personal savings account, both with the same bank, the company and the individual may each have their own £120,000 protection limit.

That said, the business still needs to be an eligible depositor, and businesses holding large balances for VAT, Corporation Tax, payroll or client projects should check whether their total cash exceeds the applicable limit.

FSCS protection for partnerships

Partnerships are more complicated.

FSCS says that where a joint account is held by two or more business partners, only one £120,000 limit is usually available for the business account. Individual partners may separately hold protected personal accounts up to £120,000 each, but the business account itself is typically treated as a single eligible depositor.

If your business operates as a partnership and holds a significant cash balance, it is worth reviewing how much of that is protected and whether spreading funds across multiple authorised firms makes sense.

What is e-money safeguarding?

Many popular business accounts are not provided by banks at all. They are provided by e-money institutions or payment institutions, which are authorised by the FCA but do not hold a banking licence.

These providers cannot offer FSCS protection. Instead, they are required by regulation to safeguard customer funds. This means they must hold your money in a dedicated account with an authorised credit institution, kept separate from the firm's own money, so that if the provider fails, your funds can be identified and returned.

Safeguarding is a genuine protection mechanism, but it is not the same as FSCS deposit protection. Key differences include:

• Limit: FSCS guarantees up to £120,000 per eligible depositor. Safeguarding has no set compensation limit, but the goal is to return 100% of client funds. In practice, the outcome in a failure depends on how well the firm has implemented its safeguarding obligations.
• Speed: FSCS can compensate eligible depositors within seven working days in most cases. Safeguarding returns can take longer, depending on the complexity of the insolvency.
• Guarantee: FSCS is a statutory guarantee backed by the government. Safeguarding depends on the firm having properly segregated funds, which is an operational and regulatory requirement rather than a government-backed guarantee.

Providers that safeguard rather than offer FSCS protection include many of the most widely used business accounts in the UK. This does not make them unsafe, but it is an important distinction to understand before you open an account.

How to check whether your business money is protected

You can check protection by:

• Searching for the bank or provider on the Financial Services Register
• Checking the FSCS protection checker
• Looking for the FSCS Protected badge
• Checking the provider’s terms and conditions
• Confirming whether the provider is a bank, building society, credit union, e-money institution or payment institution
• Checking whether different brands share the same banking licence

FSCS says its bank and savings protection checker uses Financial Services Register data and can help identify whether firms are linked under the same authorisation.

How to use the FSCS protection checker

The FSCS bank and savings protection checker can help you see whether money held with a bank, building society or credit union is protected. FSCS says you can use the checker by entering the name of the bank, building society or credit union, or its Firm Reference Number, also known as an FRN. FSCS says using the FRN gives the most accurate results because firms can have similar names.

To check a business account:

1. Find the provider’s legal name and Firm Reference Number.
2. Search for the firm using the FSCS bank and savings protection checker.
3. Add the approximate amount held.
4. Add other accounts your business holds with the same provider or banking group.
5. Check whether the provider shares a banking licence with another brand.
6. Confirm the result against the Financial Services Register and the provider’s own terms.

FSCS says that if you cannot find your provider using the checker, FSCS might not protect your money. Some authorised firms appear on the Financial Services Register but are not banks, building societies or credit unions, meaning FSCS deposit protection would not apply. For example, FSCS says it cannot protect you if an e-money firm or payment services firm fails.

That makes the checker useful, but it should not be your only step. For business accounts, you should also read the account terms and check the provider’s regulatory status.

What about Temporary High Balance protection?

FSCS also offers additional Temporary High Balance protection for certain life events, such as proceeds from a property sale, a divorce settlement or a personal injury payment. This temporary protection can cover up to £1 million for up to six months.

However, Temporary High Balance protection generally applies to personal accounts rather than business deposits. If your business is expecting a large inflow for a specific reason, it is worth contacting FSCS directly to confirm whether any additional protection might apply in your circumstances.

How to reduce risk if your balance exceeds the FSCS limit

If your business regularly holds more than £120,000 in cash, you have a few practical options:

• Spread balances across multiple authorised firms, making sure they hold separate banking licences rather than operating under the same group licence
• Use FSCS-protected savings accounts or notice accounts to separate operating cash from reserves
• Consider whether a cash management platform designed for larger business balances might be appropriate

If your business holds significant cash reserves, speaking to a financial adviser or accountant about how to structure those funds is a sensible step.

This page is for information only and is not financial advice. FSCS rules, limits and eligibility can change. Always check the FSCS website and the provider's terms for the most current information.