How safe are smaller banks?
People often save with big high street banks because they trust them. But the best rates are normally available from smaller banks and building societies.
Important information
This article gives you information to help you make the most of your money, but it isn’t personal advice. If you’re not sure if a certain action is right for you, please ask for advice.
Last Updated: 6 October 2021
Important information - This article gives you information to help you make the most of your money, but it isn’t personal advice. If you’re not sure if a certain action is right for you, please ask for advice.
People often save with big high street banks because they trust them. But the best rates are normally available from smaller banks and building societies.
There are lots of hoops that banks need to jump through in order to get a banking licence and to be authorised by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA). For starters, they’ll need to prove the safety and soundness of their company.
As long as they’re authorised, they‘ll be covered by the Financial Services Compensation Scheme (FSCS). This protects up to £85,000 of your eligible deposits. It doesn’t differ depending on the size of the bank, so smaller banks get the same protection as larger high street banks. But be aware that the £85,000 limit applies to each banking licence. If your bank shares a licence with another, you’ll only get a total of £85,000 protection across both under the FSCS.
You can check to see if your bank shares a licence with another through the Financial Conduct Authority’s Financial Services Register.
Boost your savings rate with Active Savings
Active Savings can help you get a better return on your hard-earned cash. It lets you choose savings products from a range of banks and building societies, all through one online account.
This website is issued by Hargreaves Lansdown Asset Management Limited (company number 1896481), which is authorised and regulated by the Financial Conduct Authority with firm reference 115248.
The Active Savings service is provided by Hargreaves Lansdown Savings Limited (company number 8355960). Hargreaves Lansdown Savings Limited is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011 with firm reference 901007 for the issuing of electronic money. Hargreaves Lansdown Asset Management Limited and Hargreaves Lansdown Savings Limited are subsidiaries of Hargreaves Lansdown plc (company number 2122142).
