When it comes to saving and growing your money, Individual Savings Accounts (ISAs) are one of the most popular options. But is it safe to have over £85,000 in an ISA?
ISAs are a simple, tax-efficient way to save, invest and make your money work harder for you. You don’t pay tax on any interest, dividends, or capital gains from investments inside an ISA.
You’ll have seen on many banking or investing platforms that your money is protected up to £85,000. But what does this mean in practice?
This is a very important question, particularly for people who have built up large savings or investment portfolios over time.
What is the FSCS?
You’ll likely have seen that we at InvestEngine as well as many major banking and investment platforms are covered by the FSCS. The Financial Services Compensation Scheme is like an insurance policy for your money and is backed by the UK government.
If your bank, building society, or investment platform provider fails (meaning it goes out of business and can’t pay you back), the FSCS may refund you up to £85,000.
So, if you had £85,000 or less in one savings account and that bank collapsed, the FSCS can return that amount to you, usually within seven days.
What Does the £85,000 FSCS Limit Cover?
Don’t confuse the £85,000 cover limit with the ISA annual allowance. As of now, the ISA annual allowance is £20,000, which is the amount you can put into ISAs in one tax year (6 April to 5 April).
The FSCS £85,000 limit refers to the amount that would be protected if your provider goes bust.
The important thing to remember is that if you have multiple accounts with the same provider, they share the same £85,000 protection limit.
For example: you have £50,000 saved in a Cash ISA and another £50,000 saved in a Stocks & Shares ISA both with the same provider. That’s £100,000 total. If the provider collapses, the FSCS would only cover up to £85,000. The extra £15,000 might be lost, unless some of it can be recovered by the administrators.
What if you have more than £85,000 saved with one provider?
It’s not necessarily unsafe to keep more than £85,000 with one provider. This can depend on many factors:
- What type of ISA do you have?
With a Cash ISA, your money is ordinarily held as it would be in a regular savings account. You earn interest and the risk level is generally considered extremely low. But your provider could go bust, and FSCS protection would mean up to £85,000 is returned to you.
With a Stocks & Shares ISA, your money is invested in the stock market. This means the value of your investments can go up or down. Even if your provider stays open, you can still lose money due to market performance.
FSCS protection in a Stocks & Shares ISA covers the provider, not market losses. FSCS may compensate up to £85,000 if the investment platform fails and your investments can’t be returned.
- Who is your ISA provider?
Large, regulated UK financial firms are usually considered safe from a business standpoint. They are overseen by the Financial Conduct Authority (FCA) and must follow strict rules about looking after customer money.
But no company is 100% risk-free, so it’s important to check that your ISA provider is FCA-authorised, they are FSCS-protected and that client money is held in segregated accounts.
InvestEngine is authorised and regulated by the FCA and is covered by FSCS. Your money and investments are held in segregated accounts. This means it’s separate from the company’s own finances.
How to check if your provider is FSCS-protected
Check if your provider is FSCS-protects in three simple steps:
- Go to the FSCS Register site
- Search for your provider by name.
- Look for confirmation that the company is covered.
Or you can check the bottom of your ISA provider’s website. Most list their FCA registration number and mention FSCS protection clearly.
How can I stay safe with over £85,000 in an ISA?
If your ISA savings or investments are above the FSCS limit, there are four simple ways to reduce risk:
- Split your ISA between different providers: Since the FSCS covers £85,000 per person, per provider, spreading your money across more than one provider can give you more protection. For example, you could have £80,000 with one provider and £80,000 with a different provider. Because it’s split between two firms, your total of £160,000 is fully protected by the FSCS.
- Know your investments: If you have a Stocks & Shares ISA, look at who the underlying fund managers are, how your investments are held (nominee accounts) and whether your assets are ring-fenced. Even if your platform goes bust, your shares and funds should still belong to you (unless there’s fraud or admin failure, in which case the FSCS may step in).
- Review regularly: Your ISA could grow beyond £85,000 in the long term due to returns. That would mean your protection level has been passed. A good practice would be to set a calendar reminder to review your ISA value each year and decide whether to leave it where it is or move part of it to a second provider.
- Consider joint strategies (for couples): The £85,000 FSCS limit is per person. Both of you get separate FSCS protection if you’re married or in a civil partnership. You could each hold ISAs with the same provider and both be covered up to £85,000. That’s £170,000 total, protected under the FSCS.
What happens if my ISA provider goes bust?
First the provider enters administration, then the FSCS begins an investigation. FSCS refunds up to £85,000 per person if client money can’t be returned. This usually takes a few weeks.
If the provider kept client assets correctly (as required by the FCA), the process is faster and smoother. This is why it’s so important to choose a reputable, regulated provider.
Conclusion
Yes, it is safe to keep more than £85,000 with one provider, but only if you’re comfortable with the risk of losing any amount above £85,000 in the event your provider fails.
Remember, this is a rare event – for example, the financial crisis of 2008. Since then, the FCA and the government have brought in measures to make this instance even more unlikely.
The FSCS protects up to £85,000 per person, per firm. This covers cash ISAs and Stocks & Shares ISAs (up to a point). If you have more than that with one provider, and they go under, anything above £85,000 might not be covered.
To increase the safety of your investments, you can spread money between providers, choose FCA-authorised and FSCS-protected platforms, understand how your investments are held and review your ISA value regularly.
How is money held with InvestEngine?
At InvestEngine, we are FCA-regulated, offer FSCS protection, and keep client money completely separate from our company’s money.
InvestEngine also provides low-cost investing with high-quality ETFs, and make it easy to track and manage your ISAs and SIPPs in one place. Transparency and understanding where you’re investing is key in staying protected.
FAQs
- Is my ISA safe with InvestEngine? Yes. InvestEngine is FCA-authorised, and client assets are held in segregated accounts. You’re also covered by the FSCS up to £85,000 in the rare event InvestEngine goes out of business and your money can’t be returned.
- Is the FSCS limit per account or per provider? Per person, per provider. If you have several ISAs with one firm, they all count toward the same £85,000 limit.
- How do I know if my ISA is FSCS protected? Check your provider’s website or use www.fscs.org.uk. Look for FCA and FSCS registration.
- Can I lose money in a Stocks & Shares ISA? Yes. The value of investments can go up and down with the market. FSCS protection does not cover market losses, only provider failure.
- What happens if my ISA grows past £85,000 because of investment returns? If your ISA grows above £85,000 due to good performance, the extra money won’t be protected by the FSCS. You can choose to leave it where it is (and accept the risk), or move part of your ISA to another provider to stay under the limit.
- If I have an ISA and a regular savings account with the same bank, are they covered separately? No. The FSCS limit of £85,000 applies to all money you have with the same firm, including ISAs, current accounts, and savings. So if you have £40,000 in a Cash ISA and £50,000 in a savings account at the same bank, you’re at the limit.
- Is my Stocks & Shares ISA money held in cash? No. In a Stocks & Shares ISA, your money is used to buy investments like shares, ETFs, or funds. These are held in your name, usually in a nominee account. If the provider fails, FSCS may help if the investments can’t be returned.
- What is a nominee account? A nominee account is a safe way for investment platforms to hold your investments on your behalf. It keeps your shares separate from the company’s own money. This way, your investments should be safe even if the provider goes out of business.
- Can I have more than one ISA provider? Yes. You can open ISAs with different providers. You can still hold old ISAs from previous years with multiple firms.
- Can I move part of my ISA to another provider? Yes. This is called an ISA transfer. You can move some or all of your ISA to another provider without losing the tax benefits. Just make sure you use the proper transfer process — don’t withdraw and re-deposit the money yourself.
- Does the FSCS cover fraud or hacking? The FSCS may help if your provider goes out of business due to fraud, and your money can’t be returned. But it doesn’t directly cover online fraud or hacking of your personal accounts. Use strong passwords and secure devices to protect yourself.
Important information
Capital at risk. The value of your portfolio with InvestEngine can go down as well as up and you may get back less than you invest. ETF costs also apply.
This communication is provided for general information only and should not be construed as advice. If in doubt you may wish to consult a professional adviser for guidance.
Tax treatment depends on personal circumstances and is subject to change, and past performance is not a reliable indicator of future returns.