Bank Deposit Protection Rules for Businesses : Guide

The levels of protection available for different investments underwritten by the Financial Services Compensation Scheme (FSCS) are detailed on their website.

The FSCS protects the deposits of small companies, which are those which meet two of three criteria:

  • they have fewer than 50 employees;
  • their turnover is not more than £6.5 million per year; and
  • the balance sheet total is less than £3.26 million.

Protection is limited to £85,000 per institution per investor. Protection is also available for unincorporated organisations, partnerships and sole traders, but in the latter case the limit would apply in total to all (i.e. business and personal) accounts held by the customer with the same lender.

One possible area for concern is whether deposits held in different members of the same banking group are covered separately. In this case, if each of the banks is separately authorised by the Financial Conduct Authority, the FSCS would pay compensation up to the limit of £85,000 per person per authorised institution. If each of the banks is not separately authorised but is covered by the parent company's authorisation, the FSCS would pay compensation up to the limit of £85,000 once, irrespective of how many different group members a person held accounts with.

There is temporary cover of up to £1million for temporary high balances (e.g proceeds of a house sale) with a bank, building society or credit union that fails.

If the customer has deposits at and loans from the same bank. These are now  'netted off' for the purposes of compensation, which will improve the position for some customers. However, since companies and their directors are separate people in law, netting off would not occur in these circumstances.

Deposit takers in the Channel Islands and Isle of Man are not covered by the scheme.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

Latest News

Incoming Bill Will Crack Down on Unfair and Anti-Competitive Practices
Antiquated Contracts and Commercial Coherence - High Court Ruling
Post-Brexit Biosecurity Border Controls Come Into Effect
Reasonableness of Exclusion Clauses in Hire Purchase Contracts Under Fire
Selling a Company? Put Lipstick on a Pig at Your Peril
Director of Counterfeit COVID-19 Face Masks Supplier Cleared of Fraud
Contract Adjudicators' Decisions Must Be Honoured Promptly - No Ifs, No Buts
'Reckless' Travel Company Director Ordered to Compensate Customers
Oil Major Fends Off Shareholder Bid to Reform its Climate Change Strategy
Business Interruption Insurance and COVID-19 - the Latest Legal Chapter
Authorised Push Payment Frauds - Bank Succeeds in Supreme Court Test
Share Sales - Skeletons in the Corporate Cupboard Must Be Disclosed
Lending Money to Your Company? How and When Will You Be Repaid?
Directors' Duties are a Quid Pro Quo for the Privilege of Limited Liability
Talk is Often Just Talk - Commercial Contracts Need to Be in Writing
Do You Understand the Ramifications of Entering Into a Contract Adjudication?
What to Do with a Deadlocked Company? High Court Gives Guidance
Minority Shareholder in Family Business Succeeds in 'Unfair Prejudice' Claim
'Minor Human Errors' Stymie Bid for Multi-Million-Pound NHS Contracts
Administrators Appointed to Salvage Sanctioned Air Freight Company
In Business With Your Life Partner? Don't Neglect the Legal Formalities
Art Dealership Cleared of Negligently Underselling Painting
NHS England Agrees to Suspension of £140 Million Procurement Exercise
High Court Orders Summary Enforcement of £22 Million Adjudication Award
Commercial Contracts - What Terms and Conditions Are Incorporated?
Directors' Duties to Consider Creditors' Interests - Landmark Supreme Court Ruling
Worldwide Freezing Injunctions Can Be Intrusive But Also Necessary
COVID-19 - No Binding Contract for Supply of Millions of Surgical Face Masks
High Court Slams 'Indefensible' NHS Contract Tendering Exercise
Thinking of Setting Up a Franchise Business? Seek Professional Advice
Commercially Sensitive Conversation 'Overheard Through Flimsy Partition Wall'
Is Timing of the Essence? High Court Rules on Ferrari Sale Dispute
Company Director Pays High Price for Gambling With Creditors' Money
Suffered Prejudice as a Minority Shareholder? Consult a Solicitor
Telephonist's Mistake Almost Costs Bookmaker Over £250,000
Railway Infrastructure Company Pays Price for Infringing Competition Law
Hard Negotiation or Economic Duress? High Court Gives Guidance
Incorporation of English Jurisdiction Clause Arguably 'Went Without Saying'
Risk of Industrial Action is a Fact of Business Life - Court of Appeal Ruling
Media Contract Dispute - COVID-19 Pandemic Was a 'Force Majeure Event'
COVID-19 - Premier League Triumphs in $200 Million TV Rights Dispute
When it Comes to Corporate Takeovers, Judges Have Shareholders' Backs
Can You Refuse Payment for Defective Goods? Guideline Contract Ruling
Contract Adjudications - One Dispute or More? High Court Gives Guidance
Penal Clause 'Cunningly Concealed' in Telecommunications Contract
Company Accounts Cannot Be Retrospectively Adjusted for Convenience
Business Relationship Fallen Apart? The Law Can Help Pick Up the Pieces
Commercial Negotiations - Talk is Cheap But Writing is Binding
Bidding at an Auction? Do You Understand Your Legal Obligations?
Suspension on Award of Fire Brigade Safety Equipment Contract Maintained
COVID-19 - Procurement Dispute Focuses on Award of Face Masks Contract