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Consumer Rights.

Updated: 4 Mar 2021

What to do if your bank goes out of business

This guide explains what FSCS protection you are entitled to and how much you can claim if your bank or building society goes out of business.
Which?Editorial team

In the event of the failure of an authorised bank or building society, you shouldn’t need to do anything. The FSCS will automatically compensate up to its limits and this will happen within 7 days of the failure.

When will the FSCS help?

If you hold money with an authorised bank, credit union or building society that is in difficulties, the Financial Services Compensation Scheme (FSCS) will automatically compensate you for your money up to its compensation limits of £85,000 per person.

The FSCS will also assess situations where it thinks your bank, credit union or building society is unable or likely to be unable to pay claims and may offer compensation, which it calls ‘in default’. Usually ‘in default’ means the bank has stopped trading and has insufficient assets to meet claims or it is in insolvency.

How to make a claim

You shouldn’t need to do anything in order to get your compensation if your authorised bank, credit union or building society goes out of business.

The FSCS will automatically compensate up to its limits and this will happen within 7 days of the failure.

If you think there is a problem after this time, the FSCS hasn't been in touch and you still haven’t received compensation, you can submit a claim with the FSCS.

How much compensation will I get?

Your level of protection with the FSCS will depend on which banks and building societies your accounts are with. 

You can use our free tool to search for your bank or building society and we’ll tell you how much protection you have from the FSCS.

In most cases, the FSCS will offer compensation up to £85,000 per person.

Importantly, the £85,000 limit from the FSCS applies per person and per authorised institution. But that doesn't always mean you have £85,000 protection per bank.

Some banking brands share an authorisation or 'license'. With these companies, you'll only get £85,000 protection for the authorised institution, not the individual banks you have you money saved with.

A good example of this is HSBC. HSBC Bank plc is the 'deposit-taking licence holder' for First Direct and HSBC. This means you'll only be entitled to a total of £85,000 of FSCS protection even if you have savings with more than one of these brands.

This maximum £85,000 also applies even if you have more than one account with the same bank or building society.

What if I have a joint account?

As both named account holders are entitled to £85,000 each in compensation, the FSCS protection limit for joint accounts is a combined £170,000.

Protect your savings

If you have more than £85,000 of savings in a single bank or building society, it is important to spread it around several financial institutions.

If your money is distributed across different financial institutions, your savings will be covered separately under the FSCS.

If you have an account with more than £85,000 in it that both you and your partner use which is not a joint account, you should consider opening one.

If your bank fails, you will only be entitled to compensation up to £85,000 unless the account is recognised as a joint account.

If you hold a joint account, both joint account holders will be entitled to compensation of up to £85,000 each.

Follow our five essential steps to safeguard your savings against banks failing.