Who is actually holding your money, and what happens if they fail

The number most people know is £85,000.

It has been wrong since the first of December 2025. I had it wrong myself in June, out loud, to somebody who was making a decision on it.

Deposit protection in the United Kingdom now stands at £120,000 per depositor, per authorised institution. FSCS states the mechanism plainly: if a UK-authorised bank, building society or credit union fails, it will “automatically compensate each eligible company depositor up to £120,000”. Automatically means you do not apply. It happens.

That sentence contains a condition most guidance skips over.

The condition is the word bank

Protection attaches to authorised banks.

It does not attach to a company that gives you an account, a card, a sort code and an app but is not a bank, and almost nothing in the customer experience of the two products differs.

Several of the highest-scoring providers in the survey we read in lesson 1 are banks. Monzo, Starling, Zempler and Mettle all sit inside the deposit scheme, and NatWest, which owns Mettle, states directly that “Eligible funds are protected by FSCS up to £120,000”.

Tide is a different animal, and says so itself.

“No, Tide isn't a bank. Tide is a business financial platform... We are regulated by the Financial Conduct Authority (FCA) and offer e-money accounts, provided by PrePay Solutions (PPS), as well as business bank accounts, provided by ClearBank.”Tide support pages, read 2 September 2026

Read that carefully.

It describes two different products sold under one brand, with one app, one card and one set of adverts, and the difference between them only becomes visible on the day it matters most.

E-money is not a deposit

When you pay money into a bank account, the bank owes it to you. It can lend your money out, which is what banks do, and the deposit scheme exists precisely because it lends your money out.

An e-money firm cannot do that. Instead it must keep your money separate from its own, in what the rules call a safeguarding account. Tide describes it as money “kept separate from the capital we use to run Tide”.

That sounds safer, and in one narrow sense it is.

Nobody has lent your balance to anybody.

The difference arrives when the firm fails. There is no compensation scheme standing behind an e-money balance, no automatic payment and no published timetable, so what happens instead is that an administrator takes control of the safeguarded pot, establishes who is owed what, deducts the cost of doing that work from the pot itself, and eventually distributes whatever remains to the customers it has identified, a process that has historically taken many months and has not always returned the full amount.

You can often read it off your sort code

Here is the part I did not expect to find published at all.

Tide runs both kinds of account. Which one you hold depends on when you joined, and the company publishes the tell: accounts with the sort code 23-69-72 are the e-money ones, issued under the licence of PrePay Technologies. Newer accounts sit at ClearBank, and ClearBank is an authorised bank, so those balances are eligible for FSCS cover up to £120,000.

Two customers of the same brand, same app, same card, and one is inside the compensation scheme while the other is not.

I am not picking on Tide here. It is the provider that publishes the detail clearly enough to write this paragraph, which is more than most of its competitors manage. But if your business banks with any provider that is not a bank, this is the first thing to check and almost nobody checks it.

Who counts as the depositor

The limit is per depositor, and the identity of the depositor depends on how your business is structured.

A limited company or an LLP is a separate legal person. It claims in its own right, separately from any personal accounts the owners hold at the same bank. FSCS spells the test out: “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”.

A sole trader is not separate. The business and the person are the same claimant, so one limit covers everything held at that institution.

Partnerships are the trap. Where an account is held by partners in a business, the partnership gets a single claim, not one claim each. FSCS puts it directly: the business partnership “is only entitled to a single claim of £120,000 (not one claim per business partner)”.

FSCS deposit protection rules as published, read 2 September 2026.

Same brand does not mean same institution

The limit applies per authorised institution, not per brand, and several familiar names share a licence.

A business holding money under two brands that turn out to be one authorised bank has one limit between them, not two. This is the least intuitive rule in the whole system and the easiest to get wrong when a company splits its reserves for safety.

The check takes a minute: the FCA register lists which brands trade under which authorisation, and FSCS publishes a bank and brand checker. Do it before you split money, not after.

The limit has a history, and it goes down as well as up

FSCS publishes every version of the figure since the scheme began, and the list is worth reading once because it kills the assumption that protection only ever improves.

Deposit protection limits as published by FSCS, read 2 September 2026.

Look at 2016.

The limit fell, from £85,000 to £75,000, and stayed down for thirteen months.

It fell because the figure was pegged to a euro amount and the exchange rate moved. Nothing about the banks changed. A business holding £80,000 went from fully covered to partly uncovered without doing anything, without being written to in terms most people would notice, and without any bank failing.

That is the argument for checking this once a year rather than once in your life.

Checking who really holds the money

The name on the app is a brand. The thing that matters is the authorisation behind it, and those are frequently different companies.

The Financial Conduct Authority runs a public register of every authorised firm, and it is the only source that settles the question. Search the brand, read which firm holds the permission, and note whether the permission is to accept deposits or to issue electronic money. Those two phrases are the whole lesson in five words.

FSCS also runs a checker that maps trading names to the institution behind them, which is the faster route if you only want to know whether two accounts share a limit.

Neither takes longer than a few minutes, and I would rather people did this than trusted a table on my site, including this one.

What protection does not cover

It covers deposits.

That is all it covers.

The contents of a safe deposit box are not a deposit. Money held by a payment firm on your behalf is not a deposit. An investment is not a deposit.

And it does nothing at all about the far more common problem, which is not a bank collapsing but an account being frozen while your suppliers wait.

The thing that actually goes wrong

Failures are rare. Complaints are not, and the two get confused constantly.

The Financial Ombudsman Service took 993 complaints about business current accounts in the three months to June 2026 and upheld thirty per cent of the ones it resolved.

Its own summary of the quarter reads: “Overall, we received 53,600 new complaints between April and June 2026” and “Across all financial products, we upheld 26% of the cases we resolved this quarter in favour of the consumer”. Business account complaints therefore succeed slightly more often than the average case does.

Current accounts were the most complained about product on its books that quarter, at 8,900 new cases including personal ones, and the service notes that “Fraud and scams continue to drive complaints about current accounts”.

The ombudsman is free to use, and a provider must give you a final response before you go there. It is the only route that costs a small business nothing and produces a binding answer, and on business current accounts it found for the customer in 30 per cent of the cases it resolved last quarter.

I cannot tell you how long a frozen business account stays frozen. Nobody publishes it. I have looked, I have asked, and the honest answer is that the data does not exist in public, which is itself worth knowing before you assume the process has a deadline.

How I checked this, and where it got awkward

I went looking for a straight list of which business account providers are banks and which are not, expecting to find one on a regulator's site.

There isn't one. The information exists, but it is spread across the FCA register, each provider's own support pages and the small print at the bottom of app screens, and no two of them use the same words. One page says protected, another says safeguarded, a third says covered, and only one of those three has a legal meaning that pays you money.

Reading the provider pages themselves took most of a morning. The good ones state it in a sentence. Tide does, which is why it appears so often in this lesson: it publishes the awkward version of its own answer, including which sort code belongs to which product.

The uncomfortable finding was how easy it is to hold the wrong belief without ever being misled. Nobody told my café owner that her balance was compensated. Nobody told her it was not, either. The word banking did all the work, and it is not a regulated word in the way bank is.

I had assumed that an e-money firm failing would unwind quickly, on the grounds that the money is sitting in a separate pot with everyone's name on it. That is not how administration works. The pot pays the cost of being counted before it pays anybody back, and the counting is done by people charging by the hour.

A working rule for a small business

Keep the money you are about to spend wherever the product is best. If an e-money account has the better app and the cheaper transfers and your balance turns over every fortnight, the compensation question barely touches you.

Keep the money you are not about to spend at an authorised bank, under £120,000 per institution, and know which institution that actually is rather than which logo it wears.

Do not split a reserve between two brands without checking they are separate institutions. Sharing a licence means sharing one £120,000 limit, and the second account buys you precisely nothing.

And write the date on whatever you decide. The limit moved three times in a decade, from £85,000 to £75,000 in 2016, back to £85,000 in 2017, then to £120,000 in December 2025, and the only reason anybody noticed the last one is that FSCS published a page about it.

What to do with all this

Find out whether your provider is a bank. If the marketing says banking rather than bank, that is usually the answer, and the support pages will confirm it.

If it is not a bank, decide whether you are comfortable holding a working balance there. Plenty of businesses reasonably are, because the money moves through quickly and the product is good. The mistake is holding a reserve there without knowing the difference.

If your balance is above £120,000 at one institution, the excess is uninsured, and the fix is a second institution rather than a second brand.