Martin Lewis has highlighted a savings protection rule many people are unaware exists, which can significantly increase the amount of money protected if a financial firm collapses.
Speaking on his podcast, Mr Lewis explained how the Financial Services Compensation Scheme (FSCS) can offer substantially higher protection limits during certain major life events.
The scheme can protect balances of up to £1.4million for a six-month period when money is temporarily held following specific qualifying circumstances.
These circumstances include receiving money from selling property, redundancy payments, inheritance, or drawing certain retirement benefits.
The temporary high balance protection applies per financial institution and per person, which means couples could potentially receive additional protection if funds are held across multiple providers.
Mr Lewis said: “We need to make sure that while you are temporary custodian of it as cash, it is in a safe place earning you the maximum amount of interest possible.”
The issue was raised after a listener contacted the programme to ask about protecting money from an upcoming property sale worth roughly £250,000 while searching for a new home.
The listener already held savings of around £87,000 and was concerned about exceeding the standard protected limit.
The scheme can protect balances of up to £1.4million for a six month period
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Mr Lewis said: “Actually as you’ve got money from the sale and completion of a house, you are actually covered by the lifetime event rule that says you’re covered for up to £1.4million, per financial institution, per person, for six months.”
The standard FSCS deposit protection limit currently stands at £120,000 per person per bank or building society.
This limit increased from £85,000 on December 1, 2025, giving savers greater protection if their financial provider fails.
Temporary high balance rules provide significantly higher protection levels for people experiencing major financial life events.
The standard FSCS deposit protection limit currently stands at £120,000 per person per bank
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GETTYFSCS guidance states qualifying events include property transactions, redundancy payments whether voluntary or compulsory, retirement benefit lump sums, inheritance, and proceeds from a deceased person’s estate.
Marriage settlements, civil partnership arrangements, divorce settlements and dissolution payments are also included under qualifying life events.
Insurance payouts and compensation payments, including those relating to wrongful conviction or unfair dismissal, can also qualify for temporary high balance protection.
In some cases, protection can be even higher for specific compensation categories.
If temporary high balances relate to personal injury, disability or incapacity compensation, protection levels can be unlimited under FSCS rules.
Savers do not need to notify the scheme in advance about temporary high balance protection unless their bank or building society fails.
However, claimants may need to provide evidence supporting the source of funds if a claim is made.
Evidence could include property sale completion statements, court judgements, wills, or confirmation letters from employers or pension providers.
Financial experts say awareness of temporary high balance rules remains relatively low despite the protection applying to a wide range of common financial events.
Large one-off payments can leave individuals temporarily holding sums well above standard protection limits while arranging property purchases, investments or debt repayment.
The six-month protection window is designed to allow time for individuals to make longer-term financial arrangements after receiving large payments.
Financial advisers often recommend spreading large balances across multiple institutions to maximise protection where possible
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FSCS protection only applies to authorised financial firms meaning savers should check provider status before depositing large sums.
The scheme protects deposits held in current accounts, savings accounts and certain cash-based financial products provided by regulated institutions.
Industry data suggests awareness of deposit protection limits remains mixed among savers despite periodic increases to protection thresholds.
Financial guidance groups have encouraged savers expecting large one-off payments to review FSCS rules in advance to ensure funds remain fully protected.
Experts say understanding deposit protection rules can help reduce financial risk during major life events involving large financial transfers.