The amount of standard savings protected if your bank, building society or credit union goes bust will fall from £85,000 to £75,000 from January because the pound has got stronger.

The cut means savers with large amounts of cash who are close to the current £85,000 limit should start to think about splitting up their money soon. See our Are your savings safe? guide for full information on protecting your cash.

Here are the key points:

  • All cash in UK-regulated banks, building societies and credit unions is covered by the Government-backed Financial Services Compensation Scheme (FSCS).
  • Under FSCS rules, if your provider goes bust, you currently get up to £85,000 per person, per financial institution within seven days (£170,000 for joint accounts).
  • The €100,000 Europe-wide limit is not changing, but rules state the exchange rate must be reviewed every five years by the UK's Prudential Regulation Authority, and now is the time.
  • In the past few years, the pound has strengthened against the euro. €100,000 equaled roughly £86,000 in late 2010, now it's roughly £72,000.
  • So from 1 January, the limit will fall to £75,000 per person, per financial institution (£150,000 for joint accounts).
  • The £85,000 limit came into force on 31 December 2010, up from £50,000.
  • Also from today, in the six months after depositing cash, if you can prove it came from selling a home, divorce or other major life event, it will be protected up to £1 million.

The FSCS says the move will still protect more than 95% of all consumers as the majority tend to have £50,000 or less in savings.

'You should start thinking about how to move your cash'

Helen Saxon, senior money writer at, says: "If you've savings of close to £85,000 with one bank or group of banks, you should start thinking about how you're going to move your cash around so you only have a maximum of £75,000.

"Remember, the FSCS protection limit is often shared between banks – it doesn't just apply to one account or one bank. For example, sister banks Halifax and Bank of Scotland's accounts are only covered up to £85,000 combined. If you're unsure, use our What Counts As A Bank? tool to check if your savings are fully protected."

What if my savings are locked into a fixed account?

The Bank of England has launched a consultation on proposals to allow people who are "contractually tied into products", such as those with fixed-year products, the ability to move the £10,000 difference without them incurring any penalties, such as a loss of interest.

This consultation runs until 24 July and the Bank of England hopes its proposals will take force from 1 August.

Government savings protection to be cut
Safe savings limit to fall by £10,000 to £75,000 from January

Is anything else changing?

Alongside today's news, there are some other important savings changes taking affect today:

  1. Introducing unlimited cover for personal injury compensation. Any cash that's been paid out by an insurer as part of a personal injury claim will be covered if your provider fails – no matter how large the sum. Currently if your bank fails and you had over £85k in it from a personal injury insurance payout, you'd only be compensated up to the £85k limit.

  2. Increasing the FSCS limit for certain insurance products. Cover in the event of an insurer failing will be increased from 90% to 100% for long-term insurance products, such as annuities, pure protection (products without an investment element), claims arising from death or incapacity, and professional indemnity insurance for firms.

    This is to reflect the potential for significant adverse consequences to policyholders, and the wider financial system, of cover being disrupted. The limits for all other types of insurance will remain at 90% of the cover.