Overview: FSCS protection for business accounts:
The UK’s Financial Services Compensation Scheme (FSCS) protects eligible customers of authorised financial institutions by paying compensation of up to £120,000 per eligible person, per banking licence, in the event of collapse. Certain temporary high balances are protected up to £1.4 million for six months.
The scheme gives banking customers peace of mind that their cash deposits are safe (up to a limit) in case the worst happens.
But does FSCS protection extend to business accounts? The short answer is that it could. Whether or not your deposits are eligible may be a little more complicated.
To help you get to grips with the FSCS for businesses, in this article we:
Disclaimer: While we’re here to help, the contents of this article are for informational purposes only. They do not constitute financial advice. For that, you should consult your accountant or a qualified independent financial adviser.
The UK government’s Financial Services Compensation Scheme allows sole traders, limited companies, and partnerships to claim compensation of up to £120,000 per institution if their bank, building society, or credit union fails and cannot repay the money itself (in other words, it is in default).
Note: The £120,000 limit applies to all accounts held with institutions that operate under the same licence; therefore, to optimise FSCS coverage, larger deposits should be placed with institutions that form part of separate or independent groups.
The scheme protects most businesses, regardless of size, number of employees, or turnover. However, eligibility is assessed on a case-by-case basis.
If you’re a small business owner, you can check if you can claim on the FSCS website. It’s free to make a claim — and if your business is eligible, it’ll get 100% of the money owed (subject to the £120,000 limit) and won’t be charged any fees.
The FSCS covers various financial products for businesses, including:
The FSCS generally protects a business’s cash deposits, regardless of company size. If a bank, building society, or credit union fails, the scheme will automatically compensate each eligible company depositor up to £120,000. This applies to financial institutions that failed after January 2017.
However, things can become a little more complex depending on how your business is structured. For example:
It’s also worth noting that each person is entitled to the £120,000 limit for personal joint accounts, meaning that £240,000 in total can be claimed. However, this does not apply to business partnerships. If a joint business account is held by two or more business partners, it’s still only covered up to £120,000.
Note: Your business bank account provider must be authorised by the Prudential Regulation Authority to qualify for protection. Use the FSCS’s bank and savings protection checker tool to see if your provider is covered.
If you paid for business cover with an insurer that has failed, you may be able to claim compensation from the FSCS, provided your company has an annual turnover of less than £1 million.
To be eligible for protection, the insurer must have been regulated by the Prudential Regulation Authority (PRA).
If your company invested, or was advised to invest, through a firm that has since gone out of business, FSCS may pay compensation of up to £85,000 per eligible claimant, per firm, where the firm failed after 1 April 2019.
This is a lower limit than the £120,000 that applies to deposits.
To qualify, your business must meet the "small company" definition in section 382 of the Companies Act 2006, two of the three tests on turnover, balance sheet total and number of employees.
The firm must have been FCA- or PRA-authorised at the time it carried out the business for you, and the particular activity must have been a regulated one. FSCS cannot compensate for poor investment performance; it covers loss caused by the firm's failure, such as a shortfall in assets it held for you, or unsuitable advice.
Not every provider that looks and feels like a bank is one for FSCS purposes, either. E-money institutions (EMIs) and payment services firms that are regulated by the FCA, but without a full UK banking licence, fall outside FSCS protection entirely.
This matters more than it might seem. Our survey of 500 finance and business leaders found that nearly half believe the FSCS covers e-money accounts and fintech payment providers, and a third believe it covers deposits held in banks outside the UK. It does not.
This means a business spreading cash across what it assumes are several protected accounts may have far less FSCS coverage than it thinks, if one or more of those accounts is EMI-held. Checking whether a provider is a PRA-authorised bank or building society, not just FCA-registered, is an important first step in any cash diversification strategy.
Business owners, Finance Directors, and CFOs are responsible for understanding FSCS protection criteria and effectively managing their company’s cash reserves.
To recap, if your business is eligible, up to £120,000 is protected per authorised financial institution, and each must have its own banking licence to qualify for complete protection.
To see how this might affect your business, consider the following scenario:
You’re the director of a limited company, and your business has accounts with Bank C (£60,000 balance) and Bank D (£80,000 balance). These banks, while distinct brands, share a banking licence. The banks fail, and because they’re part of the same group, they’re treated as the same bank for FSCS purposes. This means you’d only be entitled to compensation worth up to £120,000, resulting in a £20,000 loss.
You don’t have to look too far into the past to find an example of the importance of diversifying funds. The 2023 collapse of Silicon Valley Bank (SVB) offers a stark reminder of the real-world risks of exposure to a single bank and the lack of protection this provides.
What’s more, it proves just how quickly things can unravel.
SVB collapsed due to structural vulnerabilities in its business model, which were exposed when rising interest rates and concentrated withdrawals from its tech-focused client base triggered a run on the bank, with depositors withdrawing more than $42 billion in a single day.
Silicon Valley Bank failed in less than a week, meaning its UK subsidiary (SVB UK) collapsed. Fortunately, the FSCS protected deposits at SVB UK up to £85,000 (the limit in 2023) per eligible depositor. However, you could have faced significant losses if you had held more than the £85k limit at the time of collapse and couldn’t withdraw your cash in time.
The lesson from the SVB bank run and subsequent failure is that market volatility can affect cash, too. Diversification is a critical cash management strategy.
A cash savings platform like Insignis can help diversify your business cash holdings, mitigate risk, and optimise your FSCS protection where eligible. Get started here.
Knowing you should diversify is one thing; doing it well is another. In a survey of 500 senior finance and business leaders, we found that a lack of understanding and admin-heavy processes are causing businesses to leave cash unprotected:
The average business we spoke to holds £2.21 million, earning an estimated 1.61% against a competitive rate of 4.7% (based on rates available on the Insignis platform as at 3 August 2026). This equates to £94,000 in annual interest.
Another aspect of savings management that makes things difficult is that it isn’t always obvious which banks share a licence. Two accounts under different high-street names can sit under the same authorisation. Add in the EMI distinction covered earlier, and "spreading cash across several providers" doesn't automatically mean "spreading FSCS protection across several providers".
In most cases, you don’t even need to apply; the FSCS will automatically compensate you, typically within seven days for deposits.
However, the FSCS website makes it easy to claim online for more complex cases. You can do so in three simple steps:
According to the FSCS website, completing the online application can take 1-2 hours. You can save your progress and return at any time.
Find out more about the FSCS claims process here.
Diversifying your cash reserves and spreading the risk by opening several savings accounts with banks and building societies with distinct licences can help you manage and protect your company’s money.
Not every FSCS-eligible bank is an equally sensible place to hold a large deposit, either. Alongside checking that an institution holds its own separate banking licence, it's worth looking at:
This might seem time-consuming with stacks of paperwork, not to mention a headache to administer, but it doesn’t have to be. Savings platforms like Insignis are designed to help make savings management easier.
With Insignis’ single sign-up process, you can access exclusive rates and hundreds of business deposit accounts from over 55 banks and building societies.
With easy access, short-term notice and fixed-term accounts, you can capitalise on liquidity events and withdraw funds precisely when your business requires them, optimising FSCS protection subject to eligibility through efficient bank diversification.
Find out more about our business accounts here.
Spread deposits across banks and building societies that hold separate banking licences — sharing a brand or app doesn't guarantee separate protection. Beyond diversification, check that each provider is a PRA-authorised bank rather than an e-money institution, and consider bank status and credit rating alongside FSCS eligibility when deciding where to place larger balances.
Because which banks share a licence isn't visible from branding, and because e-money institutions can look like banks without carrying FSCS protection at all. Manually tracking licence groups, maturities, and rates across several providers is also administratively heavy — our research found finance leaders spend 4.5 hours a week on it.
Spreading deposits across separate banking licences increases FSCS protection, but managing several accounts manually. Tracking which banks share a licence, monitoring maturities, comparing rates is all time-consuming. A cash savings platform lets you access accounts from multiple banks through a single application, so you can diversify for FSCS protection, without the administrative burden. Insignis, for example, gives access to a panel of 55+ UK-based banks and building societies from one place.
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