How FSCS Insurance Can Safeguard Your Startup's Cash

Published 3 September 2024. Updated 28 July 2026 to reflect the FSCS deposit protection increase to £120,000.

FSCS insurance (the Financial Services Compensation Scheme) protects eligible deposits at UK-authorised banks, building societies, and credit unions up to £120,000 per person, per banking institution, if that institution fails. The limit rose from £85,000 on 1 December 2025. For a startup, the practical takeaway is simple: don't hold more than £120,000 with any single banking licence unless you have a plan for the rest.

TL;DR

• FSCS deposit protection is now £120,000 per depositor, per banking institution, up from £85,000, effective 1 December 2025 (confirmed on fscs.org.uk).
• The limit applies per banking licence, not per account. Two "different" banks that share one licence only give you one £120,000 pot between them.
• FSCS deposit protection generally does not depend on company size. Business deposits are covered on the same basis as personal deposits. Company size only matters for FSCS investment claims (money market funds and similar), where a "small company" test under the Companies Act 2006 applies.
• To protect cash above £120,000, startups typically spread deposits across multiple banking licences, or use a mix of insured deposits and other instruments such as government-backed treasury bills or money market funds.
• Round is not a bank. It's a software layer that gives you one dashboard over cash held with regulated banking and investment partners, each carrying its own FSCS-eligible protection where applicable.

What Is FSCS Protection, Exactly?

The Financial Services Compensation Scheme is the UK's statutory deposit protection scheme. If an authorised bank, building society, or credit union fails, the FSCS automatically compensates eligible depositors up to the protected limit, either by transferring balances to a solvent institution or paying out directly. It's funded by a levy on FCA-authorised firms, not by taxpayers, and it covers current accounts, savings accounts, and cash ISAs held with FSCS-participating institutions.

It's worth being precise about what it isn't. FSCS deposit protection is not general "startup cash insurance," it doesn't cover fraud on your own account, and it doesn't cover e-money products, which sit under a different regime (see below).

How Much Does FSCS Cover in 2026?

£120,000 per eligible depositor, per banking licence, effective 1 December 2025. This was confirmed by the Prudential Regulation Authority and FSCS following a consultation that also raised the temporary high balance protection (covering events like a property sale or inheritance) from £1 million to £1.4 million for six months.

Before 1 December 2025, the standard limit had been £85,000 since 2017. If you're still budgeting around the old figure, or if a spreadsheet, memo, or vendor pitch quotes £85,000, it's out of date.

For joint accounts, the protected amount doubles to £240,000 per banking licence, since each named holder gets their own £120,000 entitlement.

Does My Company's Size Affect FSCS Eligibility?

For straightforward bank deposits, no. FSCS states plainly that it generally protects companies' deposits regardless of the size of the company. A pre-seed startup and a 500-person scale-up get the same £120,000-per-institution deposit protection.

Company size only becomes relevant if you hold money in FSCS-protected investments rather than plain deposits, for example certain money market fund structures. There, FSCS applies a "small company" test under section 382 of the Companies Act 2006 (thresholds on turnover, balance sheet, and employee count), and only firms that qualify as small companies are eligible claimants for investment protection. This is a genuinely useful distinction to understand before you assume a money market fund carries the same protection as a savings account: check whether the product you're using is a protected deposit or a protected investment, and whether your company qualifies as "small" if the latter applies.

How Do I Extend My Coverage Beyond £120,000?

The core lever is simple: spread deposits across separate banking licences, since coverage is per institution, not per account or per app.

• Multiple banking licences. Two accounts that look like different banks can sit under one shared licence (common after banking group mergers), which caps you at a single £120,000 pot across both. Check the specific banking licence behind any account, not just the brand name, via the FSCS's protection checker.
• A panel of banking partners. Some platforms give you access to a spread of savings products across many partner banks through one login, so you can stay under the per-institution limit at each one without opening dozens of accounts manually.
• Non-deposit instruments for the excess. UK government treasury bills and gilts carry sovereign credit risk rather than FSCS protection, and money market funds invest in short-dated, high-quality instruments. Neither is "FSCS-insured" in the deposit sense, so weigh the different protection model against the liquidity and yield you need.

How Do I Check Whether a Bank Is FSCS Protected?

Use the FSCS's own protection checker to confirm a specific institution's coverage and to see which brands share a single licence. This matters more than people expect: several UK banking brands operate under one shared licence, so holding "two accounts at two banks" can still mean one £120,000 limit if the licences are the same.

What Happens If a Bank Fails?

FSCS steps in automatically. In most cases it either transfers your protected deposits to another bank without any action needed from you, or pays out the protected amount directly, typically within days for straightforward claims. You don't need to submit a claim in most deposit-failure scenarios; FSCS uses the failed bank's records to identify and compensate eligible depositors.

What About E-Money and Investment Products?

Not everything that looks like a bank account is FSCS-protected, and this is where founders most often get caught out.

• E-money accounts (issued by an Electronic Money Institution rather than a bank) safeguard client funds under separate FCA safeguarding rules, but e-money itself is not a deposit and is not covered by the FSCS.
• Money market funds are investment products. They're generally lower risk than equities, but they carry fund risk, not FSCS deposit protection, and any FSCS investment-claim eligibility (where it applies at all) depends on the small company test above.
• Round is not a bank. Round Financial Limited is authorised and regulated by the Financial Conduct Authority. It doesn't hold client money itself as a bank would; it's the software and orchestration layer that gives founders one view over cash held with regulated banking and investment partners. Where those partners are banks, eligible deposits carry FSCS protection up to £120,000 per partner bank. Round's Savings feature gives access to 100+ savings accounts across a panel of 25 banking partners, and Round's pricing page lists FSCS cover of up to £3.5m in aggregate across that partner panel on the Growth and Enterprise plans, alongside money market fund options that carry investment (not deposit) protection characteristics. Always check the specific product type before assuming deposit-level protection applies.

Comparing Your Options for Protecting Startup Cash

What Changed in 2026

The headline change is the FSCS deposit limit rising from £85,000 to £120,000 on 1 December 2025, alongside the temporary high balance protection rising from £1 million to £1.4 million. The Bank of England's Prudential Regulation Authority confirmed the increase reflects updated inflation data, and FSCS has said the change means more of a depositor's money is covered "from the first penny." For a startup treasury policy written before December 2025, this is worth revisiting: any internal limit or policy that references £85,000 per bank should be updated to £120,000, and it's a good moment to recheck which of your accounts share a banking licence.

Practical Steps for UK Startups in 2026

1. Map your banking licences, not just your account list. Confirm which of your accounts share a licence before assuming you have separate £120,000 protection at each.
2. Rebalance for the new limit. If you were splitting cash into £85,000 tranches, you can now hold £120,000 per institution before needing another one.
3. Separate deposit products from investment products. Know which of your cash holdings carry FSCS deposit protection versus FSCS investment-claim eligibility (subject to the small company test) versus no FSCS protection at all.
4. Review this quarterly. Cash balances change fast in a startup; a diversification plan set at seed stage may be stale by your next raise.