How deposit protection works, and where it stops

Deposit guarantee schemes exist to stop ordinary savers from having to assess a bank's solvency. They promise repayment up to a statutory limit if the institution fails, funded by levies on the industry rather than by each customer.

The unit of protection

The limit applies per depositor per authorised institution. Two accounts at the same bank share one limit. Two brands operating under a single banking licence also share one limit — a detail that regularly surprises savers who diversified by name rather than by licence.

• Joint accounts typically count each holder separately.
• Business deposits may be covered, depending on the scheme and the entity type.
• Temporary high balances from a property sale or inheritance can attract extended cover for a limited window.

What is not a deposit

Money held in an e-money account is generally safeguarded rather than insured: the provider must hold it separately, and in a failure you become a beneficiary of that segregated pool, with delays and costs deducted. Investment accounts fall under a separate investor-compensation regime that covers loss from firm failure, not loss from markets falling.