Article / 18 Jun 2026

FSCS protection is increasing – but is your business looking at the full cash protection picture?

Insight shared by:

Gateley Global

From December 2025, the UK’s Financial Services Compensation Scheme (FSCS) limit increased from £85,000 to £120,000 per person, per institution, strengthening the safety net for funds held with licensed banks.

For SMEs and international businesses managing cash across borders, this is a positive development. However, it also raises an important question: does FSCS protection alone reflect how, where and why business funds are being held?

While FSCS protection is widely regarded as a benchmark for safety, it is not the only protection model businesses may encounter. As companies scale, operate internationally or use digital banking platforms, understanding the difference between FSCS protection and safeguarding becomes increasingly important.

Understanding the difference: FSCS vs safeguarding

FSCS protection applies to eligible deposits held with authorised banks and provides compensation up to a fixed limit if the institution fails. The upcoming increase provides additional reassurance, particularly where businesses hold smaller or more static balances with traditional banks.

However, many businesses now use electronic money institutions (EMIs) and digital banking platforms alongside, or instead of, traditional banks. In those cases, funds are typically safeguarded rather than protected by the FSCS – and that distinction matters.

Under safeguarding rules, client funds must be kept separate from the institution’s own money and held in designated accounts with authorised banks or invested in secure, low-risk assets. They cannot be used for lending or day-to-day operational purposes. If the institution becomes insolvent, safeguarded funds should sit outside the institution’s estate and be returned to customers.

This creates a different risk profile. FSCS protection is capped at a set amount, while safeguarding is designed to protect the full value of client funds held on behalf of the customer.

That said, safeguarding is a regulatory framework rather than a compensation scheme. Outcomes can depend on how effectively a provider has implemented and maintained its safeguarding arrangements, which makes provider due diligence essential.

Why this matters for growing and international businesses

For many SMEs, FSCS protection remains entirely appropriate. However, businesses with more complex treasury, payment or expansion requirements may need to look beyond a single protection model and consider how their cash is actually being used.

This is particularly relevant for businesses that need to make decisions about:

  • where to hold operational cash balances above £120,000
  • how to manage multi-currency accounts and regular cross-border payments
  • whether to use one provider or a combination of banks, EMIs and payment platforms
  • how to protect investor funds or working capital while scaling internationally

In these scenarios, relying solely on FSCS limits may not fully reflect the way funds move through the business or the level of exposure involved.

Safeguarding arrangements can be advantageous where larger balances, client funds or international payment flows are involved. However, they also introduce different considerations around provider selection, operational resilience, regulatory status and the quality of safeguarding controls.

A more nuanced approach to risk

The key point is that there is no one-size-fits-all solution. FSCS protection and safeguarding serve different purposes, and many businesses will use both across their wider banking and payments infrastructure.

Rather than viewing this as a binary choice between banks and EMIs, businesses should assess:

  • how and where cash is held across the group
  • the size and duration of cash balances
  • the jurisdictions in which funds are moved and stored
  • the regulatory status and safeguarding arrangements of providers

A structured review of these questions can help businesses align their cash management arrangements with their operational needs, growth plans and risk appetite.

The takeaway

The increase in FSCS protection is a positive step and reinforces confidence in the traditional banking framework. However, it should not be treated as the only marker of safety.

For SMEs and internationally active businesses, particularly those operating at scale or across borders, safeguarding can provide a complementary and, in some cases, highly effective model for protecting client funds.

It is not about bank versus EMI – it is about choosing the right structure for how your business operates and moves money.

At Gateley Global, we help businesses assess their banking and payment options, understand provider suitability, and identify structures that support both operational efficiency and risk management. To find out how we can help, get in touch with our team today.

Get in touch

At Gateley Global, we help businesses assess their banking and payment options, understand provider suitability, and identify structures that support both operational efficiency and risk management. To find out how we can help, contact an expert below or see our team here.