FSCS or safeguarded — what is the difference?

Two different promises

FSCS protection is a statutory guarantee. If a licensed UK bank fails, the Financial Services Compensation Scheme compensates eligible depositors up to £120,000 per eligible depositor, per authorised firm. It is backed by law, and payouts are typically fast.

Safeguarding is what electronic money institutions do instead. They are required to hold customer money separately from their own, in segregated accounts at partner banks. If the firm fails, that money is not available to its creditors and should be returned to you — but through an administration process, on the administrator's timetable, with costs deducted, and with no statutory guarantee behind it.

Both are genuine protections. They are not equivalent.

Why the £120,000 figure matters

The FSCS deposit limit rose to £120,000 for firm failures from December 2025, up from the long-standing £85,000. A great many comparison pages have not been updated, so if you see £85,000 quoted, treat the rest of that page with caution.

The limit applies per authorised firm, not per account and not per brand. This trips people up constantly, because banking groups share licences:

• Mettle is a trading name of National Westminster Bank plc, so it shares one limit with NatWest, RBS and Ulster Bank.
• Lloyds, Bank of Scotland and Halifax share a limit.
• A Starling business account and a Starling personal account share a limit.

Holding two accounts with the same group does not double your protection. Spreading across genuinely separate authorised firms does.

Who is which

Licensed banks — FSCS protected

Starling, Monzo, Mettle (via NatWest), Barclays, HSBC, NatWest, Lloyds, Santander, the Co-operative Bank, Zempler and Allica all hold UK banking licences in their own right or through their parent.

It depends which account you hold

Revolut received full UK banking authorisation on 11 March 2026 and deposits held with Revolut Bank UK Ltd are FSCS-protected. Migration from the older e-money entity has been phased, so check in-app which entity holds your account rather than assuming.

Tide is not a bank. Newer Tide accounts are provided by ClearBank, a licensed bank, and are FSCS-eligible. Legacy accounts issued through an e-money institution are safeguarded only. Your sort code tells you which you hold.

E-money institutions — safeguarded

ANNA, Wise Business and Airwallex are authorised e-money institutions. Your everyday balance is safeguarded, not FSCS-protected. Some offer separate savings products held with licensed banks that are covered — but that cover applies only to money moved into those products, not to your trading balance.

When it genuinely does not matter

If you are a freelancer holding a £3,000 float and paying yourself monthly, the practical difference between safeguarding and FSCS cover is small. Firm failures are rare, safeguarded money is genuinely segregated, and the sums are recoverable.

When it matters a great deal

• You are holding a tax reserve. A year of corporation tax or VAT sitting in a safeguarded account is a risk with no upside.
• You could not survive a delay. Administration takes months, not days. Ask whether your payroll could wait.
• Your balance is large. The bigger the sum, the less appealing an unguaranteed recovery process becomes.
• You have one account. No fallback means no payroll, no supplier payments and no card acceptance while it is resolved.

The practical answer: use both

Most of the e-money providers exist because they build better tools than the banks. You do not have to choose between good tooling and good protection. Hold a licensed bank account for the balances that matter — tax reserve, working capital, anything you could not afford to have frozen — and use an e-money account alongside it for the features.

Keep the tax money on the protected side. That single habit removes most of the risk this page describes. See can I have two business bank accounts for how to split them sensibly.