Temporary high balances

FSCS protection for temporary high balances

If your UK-authorised bank, building society or credit union fails and can’t pay back your money, FSCS can automatically pay you compensation. Usually this would be up to a limit of £85,000 per eligible person, per bank, building society or credit union.

You may be entitled to additional protection if your account has a temporary high balance because of a qualifying life event, such as the proceeds of a house sale, a redundancy payment or benefits that were paid when you retired. FSCS can protect temporary high balances in your bank, building society or credit union account of up to £1m for six months.

There are some details to be aware of:

• The additional compensation limit is per person, per qualifying life event. For joint accounts with a temporary high balance, each named person would benefit from FSCS protection of up to £1m.
• The protection begins on the date the money becomes legally transferable to you, or from when it is first credited to your account or to a client's account on your behalf. You can move the funds to another account in your name and maintain the protection, but the six-month period would not begin again.
• Proceeds from second homes or buy-to-let properties are not covered. If your temporary high balance exists because of a real estate transaction, it must relate to your main residence for FSCS protection to apply.
• Compensation is unlimited for temporary high balances that relate to personal injury, disability or incapacity claims.
• FSCS can pay compensation when certain requirements set out by the UK’s financial regulators are met. Read more about the rules we’re required to follow when deciding if a claim is eligible for compensation.
• We can’t confirm whether a particular temporary high balance is protected unless your bank, building society or credit union actually fails.This is because we need to review all available evidence to check there’s a sufficient connection between the relevant life event and the sums in an account before we can make a decision.

Qualifying life events and evidence required

Certain life events could have caused a temporary high balance in your bank account, including:

• Real estate transactions (property purchase, sale proceeds, equity release. This doesn't have to be a UK property but must relate to your main residence).
• Benefits payable under an insurance policy.
• Personal injury compensation.
• Disability or incapacity (state benefits).
• Claim for compensation for wrongful conviction.
• Claim for compensation for unfair dismissal.
• Redundancy (voluntary or compulsory).
• Marriage or civil partnership.
• Divorce or dissolution of a civil partnership.
• Benefits payable on retirement.
• Benefits payable on death.
• A claim for compensation in respect of a person's death.
• Inheritance.
• Proceeds of a deceased's estate held by their personal representative.

To prove you've held a temporary high balance, we may ask for evidence which could include (but not be limited to) the following:

• A property sale receipt or agreement.
• A court judgement.
• A will.
• A letter from an insurer regarding an insurance payout.
• A letter from a lawyer, conveyancer, mortgage provider, former employer, or pension trustees.
• Court orders.
• Social security statements.
• Probate / letters of administration.
• Death / marriage certificate.
• Land register and HMRC records.

This list isn't exhaustive and the evidence we need will depend on your individual circumstances. If you provide the relevant supporting evidence and your claim is eligible under the rules we’re required to follow, we'll pay you compensation within three months.