Millions receiving large sums during life’s big moments now have greater protection says FSCS

New research from the Financial Services Compensation Scheme (FSCS) shows that over one in four people surveyed (28%) have either personally received or know someone who has received a lump sum of £120,000 or more. In fact, the research suggests that over 5 million people have had the experience of receiving a lump sum, with a further 9.75 million people saying they know someone who has, according to the latest ONS UK population figures. With an estimated £7 trillion expected to pass between generations in the coming decades, temporary high balances following major life events are likely to become increasingly common, making awareness of the protection available for your money more important than ever.

When receiving a large sum, 39% of respondents said they would place the money in cash savings accounts within the first six months. However, whether their money would be fully protected remains a key concern. 30% selected “whether the money is protected if my financial provider went out of business” when presented with a list of various concerns. This ranks higher than concerns about losing money due to being scammed (26%). 

When asked how it would feel to have to manage a large sum of money, the research paints a picture of mixed emotions. The majority – 86% a – of respondents cited positive emotions. However, a sizeable minority (of around a third – 32%) report negative emotions – including feeling overwhelmed, anxious or uncertain – highlighting the importance of reassurance and confidence when making major financial decisions.

FSCS now protects eligible deposits from the first pound up to £120,000 per person, per authorised firm, with extra cover for temporary high balances of up to £1.4m, available for six months when receiving a large sum after major life events – such as selling a home, receiving an inheritance, or drawing down a large pension sum. Temporary High Balance (THB) protection gives people time and confidence to make informed decisions about their money. But awareness is still building, with the research showing that this extra cover is not well understood.

As the tax year end prompts many households across the UK to take stock of their finances, Jake Humphrey – founder and host of the High Performance podcast and co-founder of Whisper, a leading global production company – is encouraging people to carry out a simple financial “health check”, including understanding how their savings are protected if they receive a large sum.

Jake Humphrey said: “The start of a new financial year is when lots of households take stock of their finances, and it’s the perfect moment for a simple financial health check. We spend a lot of time thinking about our physical and mental health, but financial health matters too. Often, it’s the small habits, like knowing how your savings are protected, that make the biggest difference.”

“Big life moments like selling a home, receiving an inheritance or drawing a pension can suddenly leave you dealing with far more money than you’re used to, and it can feel overwhelming.

“One simple habit that really helps is understanding how much of your money is protected by FSCS. Knowing that your savings are protected up to certain limits gives you the confidence to pause, think clearly and make good decisions about what to do next.”

Martyn Beauchamp, Chief Executive of FSCS, commented: “FSCS protection helps safeguard eligible deposits if an authorised firm fails. In certain life events, Temporary High Balance protection provides additional reassurance to UK consumers while they take time to plan carefully. Our research shows that around three-quarters of people say understanding this protection makes them feel more confident when managing large sums of money and knowing their savings would be safe if a provider failed. That confidence matters because when a financial provider goes out of business, it can directly affect your savings, your family’s security and your peace of mind. Knowing your money is FSCS protected means you can feel confident your money is safe.”

Consumers can visit the FSCS website to check whether their bank, building society or credit union is authorised and how deposit protection applies to them.

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