FSCS protection vs e-money safeguarding: what actually covers your business account

Every business current account in the UK sits on one of two legal foundations. Either the provider is a bank or building society authorised to take deposits, in which case your balance is a deposit protected by the Financial Services Compensation Scheme (FSCS), or the provider is an electronic money institution, in which case your balance is e-money and the firm must safeguard it under the Electronic Money Regulations 2011. The two look identical inside an app and behave very differently on the day a provider fails. This guide sets out what each regime is, what happens in an insolvency under each, and how to tell which one your account is under.

Key facts

• FSCS protects eligible deposits up to £120,000 per eligible person, per authorised bank, building society or credit union. The limit rose from £85,000 on 1 December 2025 (FSCS, deposit protection limit).
• The limit is “per person per banking licence”, so brands sharing one licence share one £120,000 limit (FSCS, banking licences).
• FSCS says it “will pay compensation within seven working days of a bank, building society or credit union failing” (FSCS, banks and building societies).
• E-money is not covered. The FCA: “if your non-bank payment provider goes out of business, your money won’t be protected by the Financial Services Compensation Scheme (FSCS)” (FCA, using payment service providers).
• New FCA safeguarding rules for payment and e-money firms took effect on 7 May 2026 (FCA, PS25/12).

What FSCS protection is and the current limit

The Financial Services Compensation Scheme is the UK’s statutory compensation scheme for customers of authorised financial firms. For deposits, its banks and building societies page puts the position in one sentence: “If you hold money with a UK-authorised bank, building society or credit union that fails, we’ll automatically compensate you up to £120,000 per eligible person, per bank, building society or credit union.”

The figure is recent. FSCS’s deposit limit page states: “On 1 December 2025 the FSCS deposit protection rose to £120,000.” Before that, “Between 1 January 2017 and 30 November 2025, the deposit compensation limit was £85,000.” The Prudential Regulation Authority (PRA) sets the limit and, per the same page, “is required to review the FSCS deposit compensation limit periodically and at least every five years.”

Two further points from FSCS matter for a business. First, compensation is automatic and quick: “FSCS will pay compensation within seven working days of a bank, building society or credit union failing.” Second, there is a higher temporary limit for certain one-off sums: “We also protect certain qualifying temporary high balances up to £1.4 million for six months from when the amount was first deposited.” The eligibility rules for temporary high balances are FSCS’s own and are worth reading directly if a large one-off receipt is due to land in a business account.

One limit per banking licence, not per brand

The limit is not per account and not per brand. FSCS’s banking licences page puts it as “up to £120,000 per person per banking licence”. A licence belongs to one legal entity, and one entity can trade under several names. FSCS’s own examples are HSBC, whose licence also covers “fd, first direct, first direct bank and fd bank”, and Nationwide, whose licence covers “Derbyshire Building Society, Cheshire Building Society, The Derbyshire, Derbyshire Direct, Dunfermline Direct and Dunfermline Building Society”.

If your business holds £90,000 with one brand and £60,000 with another that turn out to be the same licence, the protected total is £120,000, not £150,000. FSCS’s advice is to “search the Financial Conduct Authority’s financial services register to see what other names your bank might use or trade under.”

FSCS also runs a bank and savings protection checker. It “uses data from the Financial Conduct Authority (FCA) Financial Services Register” and “displays all firms linked to the same Firm Reference Number (FRN), including trading names and subsidiaries.” Where two of your selections share a licence, it says so: “Some of the banks you’ve selected share the same banking license and are part of the same banking group. This means they share protection limits across all the accounts within the banks in that group, not separate limits for each bank.”

Three providers in our comparison show why this matters. Virgin Money’s M Account tariff guide describes the provider as “Nationwide Building Society (trading as Virgin Money)”, and its Business Current Account page states that protection is on “your combined eligible deposits with Virgin Money and Nationwide up to £120,000”. Mettle’s fee information page says “The Mettle bank account is provided by National Westminster Bank plc trading as Mettle” - the same legal entity that provides NatWest’s own business accounts. The Co-operative Bank’s product page flags a further case: if its proposed transfer to Coventry Building Society completes, “you will have a single FSCS protection limit of £120,000 which will apply to your eligible deposits with the Bank, smile and the Society”.

Sole traders, partnerships and limited companies

The word “person” in “per eligible person” is doing a lot of work. FSCS’s banks page explains how it applies to businesses:

“If your business is a separate legal entity, e.g., a limited company or LLP, you could claim up to £120,000 for each account. If you’re a sole trader (e.g., Mr Smith trading as Smith Motors) you wouldn’t be entitled to two separate claims, you could claim up to £120,000 in total.”

In plain terms, a limited company or LLP is a depositor in its own right, separate from its director’s personal money at the same bank. A sole trader is the same legal person as the business, so a personal account and a “trading as” account with the same bank share one limit. For a partnership, FSCS says the entity is “only entitled to a single claim of £120,000 (not one claim per business partner)”. Monzo’s business account FSCS information states the same principle from the bank’s side: “Eligible deposits in business accounts are treated as if made by a single depositor.”

What e-money safeguarding is

An electronic money institution (EMI) is not a bank. It does not take deposits; it issues electronic money against the funds you pay in. The FCA’s consumer page on payment service providers describes e-money as money that “is stored electronically, usually in an online account or wallet, or on a prepaid card.”

Because an EMI is not lending your money out the way a bank lends deposits, the law protects it differently. Regulation 20 of the Electronic Money Regulations 2011 requires that “Electronic money institutions must safeguard funds that have been received in exchange for electronic money that has been issued” - the regulations call these “relevant funds” - and that they “must be safeguarded in accordance with either regulation 21 or regulation 22”.

Regulation 21 is the segregation route. “An electronic money institution must keep relevant funds segregated from any other funds that it holds.” Funds still held at the end of the business day following receipt must be placed in a separate account with an authorised credit institution or the Bank of England, or invested in secure, liquid, low-risk assets held with an authorised custodian. The account must be designated as a safeguarding account, and “No person other than the electronic money institution may have any interest in or right over the relevant funds or relevant assets” except as the regulation allows. Regulation 22 is the alternative route, which the FCA’s firms page on safeguarding describes as “an insurance policy with an authorised insurer or a comparable guarantee”. The same page gives the purpose: the “return of funds to the firm’s clients in case of its failure”.

The FCA has tightened this regime. Its policy statement PS25/12, published on 7 August 2025, introduced safeguarding rules in the Client Assets sourcebook (CASS 15) that took effect on 7 May 2026. The stated aim is to “better protect customers of payments and e-money firms that fail” and to “reduce shortfalls in client funds and ensure they are returned to customers as quickly as possible.” Safeguarding remains a rule about how the firm must hold your money, not a compensation fund.

What happens when a provider fails

A bank. Eligible deposits up to £120,000 per depositor per licence are compensated by FSCS, which says it pays “within seven working days”. You do not have to make a claim; FSCS’s page says it will “automatically compensate you”. Anything above the limit, other than a qualifying temporary high balance, is outside the scheme.

An e-money institution. There is no FSCS payout. Your money sits in the safeguarded pool, which an administrator or liquidator identifies and returns. The FCA’s consumer page is candid about what that means: “if they go out of business, you should get most of your money back. But it may take some time to receive, and it may not be the full amount, as some costs could be taken by the administrator or liquidator of the firm.”

Three practical differences follow. Timing: a stated seven working days against an insolvency process with no fixed timetable. Amount: a defined sum up to the limit against a share of whatever was correctly safeguarded, less costs. Ceiling: FSCS stops at £120,000, or £1.4 million for a qualifying temporary high balance, while a safeguarded balance has no upper limit but no guarantee either.

One hybrid deserves a note. Tide’s pricing page states “Tide is not a bank” and that Tide “is authorised by the FCA under the Electronic Money Regulations 2011 (FRN: 900843) to issue e-money”. Yet the same page says “Tide current and savings accounts are powered by ClearBank Ltd (FRN: 754568) … Eligible deposits are protected up to £120,000 per depositor by the FSCS, across all accounts with ClearBank”, while “Some Tide members hold e-money accounts (sort code: 23-69-72) powered by PrePay Technologies Limited (PPT) (FRN: 900010) … PPT holds an amount equivalent to the money in these accounts in a safeguarding account”. One brand is offering FSCS-protected deposits to one member and safeguarded e-money to another.

How to check a provider on the FCA Register

The FCA’s Financial Services Register is, in the FCA’s words, “a public record of firms, individuals and other bodies that are, or have been, authorised by us or the PRA” (FCA, about the register). Its guidance on checking a firm adds that the register “contains our full regulatory record for firms, individuals, and other bodies”, including “Firms’ ability to handle client money”, and that “If we’ve published a warning about an unauthorised firm, this will appear on the FS Register”.

A workable routine:

1. Find the legal entity and Firm Reference Number (FRN) on the provider’s own site, usually in the footer or on a regulatory page. Wise states that “Wise Payments Limited is authorised as an Electronic Money Institution (EMI) by the UK Financial Conduct Authority (FCA) with registration number 900507”. ANNA’s accounts are issued by PayrNet Limited, FRN 900594. Tide gives three: 900843 (Tide), 754568 (ClearBank) and 900010 (PPT).
2. Search the FRN at register.fca.org.uk and check the legal name matches exactly; the FCA’s guidance warns about clone firms.
3. Read the status and permissions. The FCA’s consumer page: “You can check our Financial Services Register to make sure a provider is authorised and has permission for the service it’s offering you.” A firm authorised to accept deposits is a bank; a firm authorised under the Electronic Money Regulations is an EMI.
4. Cross-check with the FSCS protection checker, which shows every trading name under that FRN and whether two of your providers share a licence.
5. For a brand fronting a bank, check both the brand and the underlying bank, and which of the two holds your account.

Banks and e-money institutions in our comparison

Our comparison table records each provider’s own wording on protection, read on 5 September 2026, and our methodology explains how the rows are built and why some providers are excluded. In summary:

Banks - deposits, FSCS-protected

• Barclays - product page carries the “FSCS Protected” marker.
• HSBC UK Bank plc - links to its FSCS information sheet.
• Lloyds Bank plc - links to its FSCS page.
• NatWest (National Westminster Bank Plc) - “FSCS deposit protection (eligibility criteria apply)”.
• Santander - “With the Financial Services Compensation Scheme, your business’s money is covered for up to £120,000.”
• Metro Bank PLC - “Deposits are protected by the Financial Services Compensation Scheme up to £120,000 for eligible businesses.”
• The Co-operative Bank - FSCS information sheet linked; a single £120,000 limit would be shared with Coventry Building Society if the proposed transfer completes.
• Virgin Money (Nationwide Building Society trading as Virgin Money) - “combined eligible deposits with Virgin Money and Nationwide up to £120,000”.
• Starling Bank - FSCS logo and leaflet on the product page.
• Monzo Bank Limited - “£120,000 per depositor per bank”.
• Zempler Bank - “FSCS protection up to £120,000 on eligible deposits: Yes”.
• Mettle - “provided by National Westminster Bank plc trading as Mettle”; its legacy e-money accounts, provided by PPS, are not FSCS-protected.
• Allica Bank - “any eligible deposit of up to £120,000 will be protected.”

E-money institutions - safeguarded, not FSCS

• ANNA Money - “Funds in your main ANNA account are safeguarded in accordance with the Electronic Money Regulations 2011 and are not protected by the Financial Services Compensation Scheme (FSCS).” (The same page says ANNA’s separate savings product via Griffin Bank is FSCS-eligible.)
• Wise Business - Wise Payments Limited, an EMI, FRN 900507; the business page says “Safeguarded: Your money is diversified and held with a secure group of financial institutions.” FSCS is not mentioned.
• Tide - “Tide is not a bank”; an EMI (FRN 900843) whose current accounts are provided by ClearBank and FSCS-protected, while legacy PPT e-money accounts are safeguarded. Listed here because the brand itself is an EMI; which regime applies depends on the account you hold.

The short test: if a provider’s own page says “FSCS” and gives an FRN that resolves on the register to a firm authorised to accept deposits, it is a bank account. If it says “safeguarded” or cites the Electronic Money Regulations, it is e-money. If it says neither, the FCA Register settles it.

Related guides: Business bank account fees explained and Multi-currency business accounts and FX fees.