How do banking licences affect FSCS protection?

To start a bank and offer financial services, a firm must have the relevant banking licence. But a banking firm can have more than one brand, which means that seemingly unconnected banks are linked and, more importantly for your money, will share a banking licence.

This is important because FSCS protection for banks, building societies and credit unions is up to £85,000 per person per banking licence, or up to £170,000 for joint accounts. This means that if you’ve got money spread across the banking sector, yet the firms share a banking licence, we can only protect up to £85,000 in total.

The easiest way to check which banks share a licence is to search the Financial Conduct Authority’s financial services register to see what other names your bank might use or trade under. For example, HSBC also uses the names fd, first direct, first direct bank and fd bank, meaning they all, plus HSBC, share a banking licence.

Building societies and credit unions operate in a similar way, with one firm often using many trading names, usually as a result of acquiring smaller firms. For example, Nationwide also has the brand names of Derbyshire Building Society, Cheshire Building Society, The Derbyshire, Derbyshire Direct, Dunfermline Direct and Dunfermline Building Society, all of which have the same banking licence.

So, if you hold more than £85,000 with multiple banks, building societies or credit unions, make sure you know if they share a banking licence by searching the financial services register.

Listen to our podcast which explains banking licences: #24 Mini-pod: What’s a banking licence and how does it affect how much of my money is protected?