FSCS limit increase explained: What it means for charities

Why has the FSCS limit increased?

The FSCS protects depositors in the unlikely event that a UK-authorised bank, building society or credit union fails. The previous £85,000 limit had remained unchanged since 2017, but inflation and economic shifts eroded its real value. Following a statutory review, the Prudential Regulation Authority (PRA) raised the limit to £120,000 to restore protection and maintain public confidence in the financial system.

This change reflects the PRA’s commitment to keeping FSCS protection meaningful. The new limit is both economically justified and easy to remember, helping depositors — including charitable organisations — make informed decisions about where and how they hold their funds.

What does this mean for charities?

Charities and social purpose organisations often hold deposits for a variety of reasons: operational reserves, restricted funds, grant income, or proceeds from fundraising campaigns. While most organisations keep balances within the previous FSCS limit, there are times when funds may exceed it, such as, after receiving a major donation or selling an asset.

The increased limit means more of your organisation’s money is now protected under the FSCS, reducing the risk and strengthening financial resilience. 

Key points for charities:

• FSCS coverage: Eligible deposits held by charities and non-profit organisations up to £120,000 are protected.
• Per institution: This limit applies to each licensed financial institution, so this means spreading deposits across multiple banking providers can extend protection.

How does FSCS protection work?

If a UK-authorised bank, building society or credit union fails, the FSCS will automatically compensate eligible depositors up to the current protection limit. 

There is no need to apply, the process is swift and direct, and most customers receive their money back within seven days. For charities, this means your day-to-day banking, savings accounts, and notice deposits are covered, provided they are held with a participating institution.

What should you consider?

While no action is required to benefit from the increased protection, it is a good opportunity to review your deposit arrangements and make sure they align with your organisation’s financial strategy and risk appetite.

Consider the following:  

• Understand your coverage: Check whether your accounts are eligible for FSCS protection and how the rules apply to your legal structure.
• Speak to your banking partner: If you have questions about FSCS coverage or deposit arrangements, contact your banking provider to review your options and ensure they align with your organisation’s financial strategy.

How CAF Bank is supporting you

As a bank dedicated to serving charities and social purpose organisations, CAF Bank welcomes the increase in FSCS protection. We know that financial resilience is vital to your mission, and we are committed to helping you safeguard your funds.

In response to the change, we have:

• Notified customers and updated our website disclosures.
• Ensured full compliance with the PRA’s disclosure requirements.

We are here to help you navigate this change with clarity and confidence.

Ways CAF Bank helps you put the higher protection to work

Our current account and instant-access savings are available for your day-to-day banking needs. This ensures your operational balances remain easy to manage and protected under the new FSCS limit.