FSCS protection: how it safeguards your business bank deposits

What if your bank suddenly collapsed?

Not exactly a cheery thought, but understanding Financial Services Compensation Scheme (FSCS) protection could save you a serious headache. It’s there to keep your deposits safe if the worst happens but the details matter.

Let’s unpack how it safeguards your business bank deposits.

What exactly is FSCS protection?

Imagine waking up one morning to find out that your bank has collapsed. It’s a terrifying thought, especially if your business relies on that money to pay suppliers and employees or just to keep things running smoothly. That’s exactly why the Financial Services Compensation Scheme (FSCS) exists to make sure your business doesn’t lose everything if the worst happens.

If your bank collapses, FSCS typically refunds up to £85,000 per business automatically within 7 days. Usually, no formal application is needed, although in some cases you may need to confirm details to receive compensation.

It’s funded by the financial services industry, not taxpayers, and is overseen by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA). Think of it as an insurance policy that you don’t have to pay for. But, as with any protection scheme, there are rules about who qualifies, what’s covered, and what isn’t, which we’ll break down next.

How FSCS safeguards your business deposits

If your bank collapses, FSCS automatically refunds up to £85,000 per business, per bank under the deposit guarantee scheme no applications needed, no waiting around. Most payouts happen within 7 days, ensuring minimal disruption.

• FSCS protection covers both current and savings accounts at UK-authorised banks, building societies, and credit unions
• Protection is automatic - you don’t need to sign up or apply
• Spreading funds across multiple FSCS-protected banks can help safeguard deposits over £85,000

While FSCS offers strong protection, it’s important to know your limits. If your business holds more than £85,000 in a single bank, consider diversifying across multiple institutions. A little planning now can ensure your money stays secure, no matter what happens.

Covered or not? what FSCS protects (and what it doesn’t)

FSCS protection isn’t just for personal accounts; businesses are covered, too, provided they meet certain criteria. UK-registered companies, sole traders, and partnerships qualify, with protection capped strictly at £85,000 per business per bank, regardless of how many directors or partners share access.

Only UK-authorised banks, building societies, and credit unions are covered, meaning your provider must be regulated by the FCA and PRA. If your money is held in one of these institutions, FSCS will step in automatically if the bank fails.

However, not all deposits qualify. FSCS does not cover investment accounts, cryptocurrencies, or e-money providers like certain fintech platforms, as outlined in the exclusions list. If your business relies on these, it’s worth checking what protections they offer before depositing large sums.

Why FSCS protection is essential for businesses

Losing access to your business funds overnight isn’t just stressful, it can be catastrophic. Here is why FSCS protection matters:

• Protects working capital – This ensures businesses don’t lose money if a bank fails or if a financial firm you've used becomes insolvent.
• Fast access to funds – Most payouts happen within 7 days, preventing cash flow issues.
• Covers only regulated banks – FSCS protection applies to FCA and PRA-authorised institutions.

For businesses, stability is everything. FSCS protection ensures that even in the worst-case scenario, your deposits are secure and recoverable. Without this safety net, a bank failure could leave businesses unable to pay staff, suppliers, or bills, putting operations at serious risk.

While FSCS offers strong protection, businesses holding more than £85,000 in a single bank should consider diversifying across multiple FSCS-covered institutions. This simple step can increase security and minimise financial disruption in uncertain times.

How to maximise your FSCS protection

If your business holds more than £85,000 in a single bank, you could be at risk of losing anything above that limit if the bank fails. To stay protected, consider spreading your deposits across multiple FSCS-covered banks. This ensures that all your funds remain within FSCS protection, reducing financial exposure.

It’s also important to check if your bank is FSCS-protected before opening an account. Some businesses benefit from diversifying with savings accounts or bonds. FSCS also offers temporary high balance protection of up to £1 million for 6 months for specific life events like property sales or inheritance.

As your business grows, so does the complexity of managing your money. Regularly reviewing your banking arrangements helps keep your deposits safe and aligned with FSCS limits. A little planning now, can prevent unnecessary risks and keep your business financially secure in the long run.

How to check if your business bank is FSCS-protected

Before depositing large sums into a business account, it’s crucial to confirm your bank’s FSCS protection. While the FSCS logo on your bank’s website or account documents is a good initial sign, always verify directly through the FSCS bank checker tool. These simple steps help avoid unnecessary risks.

For extra certainty, you can check the FCA register to see if your bank is authorised in the UK.

If you’re still unsure, contact your bank directly and ask whether your business deposits are covered under FSCS. A regulated bank should provide clear confirmation, ensuring you have peace of mind before making any financial commitments.

Final Thoughts

FSCS protection gives businesses peace of mind, ensuring deposits are safe even if a bank fails. But with a limit of £85,000 per bank, smart money management is key. Spreading funds across FSCS-protected accounts can help maximise security.

At Allica Bank, our business account is built for growing businesses, FSCS-protected, offer competitive rates, and designed to help your money work harder.

Ready to secure your savings?

Explore our business account today.

A business account that works as hard as you do

Our Savings Pot, linked to our Business Rewards Account, offers up to 4.33% AER *(variable) with instant access, monthly interest payments and no account opening fees. It’s designed to help your business grow its reserves without locking your money away. 

You’ll also have a dedicated relationship manager to support you as your business evolves, helping you make confident financial decisions. 

If you're looking for a secure and flexible way to grow your savings, sign up to our Business Rewards Account

*Rate includes standard rate of 3.33% AER (minimum balance applies) plus a 0.5% boost each month if you make 15 bank transfers out of the account in the previous month, and a 0.5% boost for six months if you complete a switch with CASS. Rates correct as of 9th May 2025. ‘AER’ stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year. Subject to eligibility – see Savings Pot Key Product Information for more details.

Links were live and information was correct at the time of writing the article.

Disclaimer: This is information – not financial advice or recommendation

The content and materials featured in this article are for your information and education only, and are not intended to take into consideration any particular recipients’ financial situation. The product details and interest rates referred to are correct at the time of writing.

The information does not constitute financial advice or recommendation and should not be considered as such. Allica Bank will not accept any liability for any loss, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.