Are neobank deposits protected? It depends on the licence, not the app

So, are neobank deposits protected? Some are and some aren't, and the app you open every morning almost never tells you which of the two cases your company is in, because the answer sits in the licence behind the brand rather than anywhere on the balance screen. For a UK company it comes down to a single figure: 120,000 pounds of Financial Services Compensation Scheme cover, or nothing from that scheme at all.

I started this piece expecting to write that e-money is simply unprotected. I was wrong, and it's the kind of wrong that would have misled a finance director. Money at an e-money institution has a different sort of protection. It doesn't pay compensation and it won't arrive in 7 days, but it isn't nothing. Most of what follows is about that gap. I would rather a reader leave with the gap clearly in view than with a comforting label, because the label is what a marketing team writes and the gap is what an administrator has to deal with when a provider nobody expected to fail stops answering the phone.

The number in my head was 85,000, and it's gone

On 1 December 2025 the UK limit rose from 85,000 to 120,000 pounds per eligible person per banking licence. The Prudential Regulation Authority set it in PS24/25, published on 18 November 2025. The policy statement says the limit is "to be increased to £120,000, rather than £110,000 as consulted on", so the regulator went further than its own draft. The cap for temporary high balances moved from 1 million to 1.4 million pounds on the same day and covers such a balance for 6 months.

A short digression, because this one caught me out on 16 September 2026. The FSCS article that explains e-money most clearly still quotes 85,000 further down the page. The scheme's page on banks says 120,000. So even the scheme lags itself by more than nine months. If the body that pays out can carry an old figure on one of its own pages, a provider's help centre can carry one for much longer, and nobody is obliged to go back and fix it. Read the figure from the scheme, and the date from the regulator.

Inside the EU the ceiling is 100,000 euro under Article 6 of Directive 2014/49/EU. Article 8 gives schemes 7 working days to pay. The FSCS says it pays "usually automatically and within seven days", and that trust arrangements can take up to three months. Anyway, both regimes rest on the same assumption, which matters more than the amount. They protect deposits at a bank, and only there. Everything else, however bank-like the card and the app feel in your hand, sits outside that promise and relies on a different mechanism entirely, one that was designed to keep money apart rather than to replace it.

EMI vs bank licence decides whether a scheme exists at all

The FSCS says it plainly on its e-money page: "We can't protect the money you have with e-money institutions and payment providers." The FCA repeated it on 7 August 2025, writing that such funds "are not directly protected by the Financial Services Compensation Scheme". So emi vs bank licence isn't a footnote. It's the whole question, not a detail. Everything below hangs off it.

Here's how that looks across the eight accounts in this index, using licence records I checked on 1 September 2026.

Licence and protection per legal entity, from the provider profiles in this index, checked 1 September 2026.

Account	Entity	Licence	What stands behind the balance
Wise Business	Wise Payments Limited	E-money institution, FCA	Safeguarding, no FSCS
Revolut Business UK	Revolut Bank UK Ltd	UK bank, PRA and FCA	FSCS up to 120,000 pounds
Revolut Business EU	Revolut Bank UAB	Lithuanian bank	Deposit insurance up to 100,000 euro
Monzo Business	Monzo Bank Limited	UK bank, FRN 730427	FSCS up to 120,000 pounds
Starling Business	Starling Bank Limited	UK bank	FSCS up to 120,000 pounds
N26 Business	N26 Bank AG	German bank, BaFin 145827	German scheme up to 100,000 euro
Qonto	QONTO SA	Payment institution, ACPR 16958	Funds segregated at partner banks
bunq	bunq B.V.	Dutch bank	Dutch scheme up to 100,000 euro

Two of them aren't banks. That ratio surprised me less than the Revolut rows did. One logo sits on two entities with two payout schemes, and the app looks identical on both. Revolut Bank UK Ltd had its restrictions lifted on 11 March 2026, yet my profile notes say customers signing up after that date could still land on an e-money account at Revolut Ltd until migration reaches them. I cannot tell from outside how many business customers sat in that gap after 11 March, or sit there now. Revolut doesn't publish its own number. It's an uncomfortable thing to leave open. But I'd rather say so than guess at it.

What I'd check on my own account first

Search the legal entity, not the brand name you know from the app store. The FCA register, BaFin, De Nederlandsche Bank and the ACPR all let you search by number, and numbers don't get rebranded. If the entity is a credit institution, the eligible balance is covered up to 120,000 pounds or 100,000 euro. Several accounts at one licence share that limit. Opening a second or a third business account at the same bank, which feels like spreading the risk when you do it on a Friday afternoon, changes nothing about how much of the total a compensation scheme would hand back to the company. Starling's own FSCS sheet, dated 2 June 2026, says business accounts are treated as a single depositor.

If the entity is an e-money or payment institution, I'd write to the provider and ask which method it uses under regulation 20 and at which banks the segregated money sits. The FSCS adds a useful wrinkle, noting that some apps let you hold money with other firms from inside the app, and that these "other firms might be banks that do have FSCS protection". Qonto publicly names its partner banks, 4 of them in our profile, rather than a scheme of its own.

Safeguarding vs deposit insurance, in plain terms

Deposit insurance is a promise from an industry funded scheme. If the bank fails, a third party pays you back up to a limit. Safeguarding is a duty on the firm itself to keep your money apart from its own, so the money is still there when the firm isn't. One of them is compensation paid by somebody else. The other is a fence. I prefer the fence picture because it makes the next question obvious, which is how well anybody is checking the fence. And the phrase safeguarding vs deposit insurance hides the real point, which is who carries the loss when the fence has holes in it.

In the UK the rule starts at regulation 20 of the Electronic Money Regulations 2011, which says relevant funds "must be safeguarded in accordance with either regulation 21 or regulation 22". Regulation 21 covers segregation of the money. Regulation 22 is an insurance policy or a comparable guarantee, and a firm can mix the two. Under segregation, money still held at the end of the business day after receipt must go into a separate account at a credit institution or the Bank of England, or into secure, liquid, low risk assets. Card receipts get 5 business days. Regulation 23 of the Payment Services Regulations 2017 copies the same logic for payment institutions, and the EU texts are almost word for word: Article 10 of PSD2, Directive 2015/2366, wants funds "insulated in accordance with national law in the interest of the payment service users against the claims of other creditors", and Article 7 of Directive 2009/110/EC puts the same duty on e-money firms. I read all 4 provisions side by side on 16 September, and the differences are mostly in the numbering.

Before I opened regulation 21 I had assumed the separate account was held in the customer's name, which is the comfortable reading and also the wrong one. It's held by the firm, for customers, and the difference sounds pedantic until somebody has to divide what is in it. That detail is where the 2022 arguments began.

What happens if an EMI fails

Regulation 24 says e-money holders are paid from the asset pool "in priority to all other creditors". Only the costs of distributing the pool come first. On paper that's a reassuring place to stand. But what happens if an emi fails really splits in two: is the pool complete, and how long does handing it out take?

On completeness, the FCA published a figure I keep thinking about. Payment firms that became insolvent between Q1 2018 and Q2 2023 "had average shortfalls of 65% of their customers' funds". That's an average, so some customers got more and some got less, and the release I read on 16 September 2026 gives no spread. In 2019 the FCA had looked at 11 non-bank firms and found checks "not always as frequent or accurate as they should be".

On timing, there are special rules. The Payment and Electronic Money Institution Insolvency Regulations 2021 were made on 17 June 2021 and came into force on 8 July 2021. Objective 1 for an administrator is to return funds "as soon as is reasonably practicable". The FSCS is a good deal blunter about it, and I think more honest. It warns your money "could be tied up for a while during the insolvency process".

Ipagoo shows what a while looks like. The judgment rewards an evening spent on it, not for the law, which is dense, but for the sense it gives of how much argument can stand between a failed provider and the customers waiting on the other side of it. Ipagoo LLP went into administration and the shape of its asset pool went to the Court of Appeal, which ruled on 9 March 2022 in [2022] EWCA Civ 302. The court found no statutory trust over customer money. That surprised me on a first reading. It also held that the pool must include a sum equal to funds that were meant to be safeguarded but weren't, and it dismissed both the appeal and the cross appeal. I'm not sure whether anyone tried to take it further in the 4 years since, and because I didn't search for a Supreme Court hearing separately, treat that part as unchecked rather than settled.

A freeze is the more likely bad day

Insolvency is rare. A regulator stepping in is more common. That can make a balance unusable even when nothing at all is missing from it. On 26 June 2020 the FCA told the UK arm of Wirecard it must not dispose of any assets or funds or carry on regulated activities. The FCA's statement admits this "had the effect of preventing consumers from withdrawing and making payments with those funds". The restriction lifted at 00:01 on 30 June 2020. On 28 August 2020 the firm said it would wind down.

Four days sounds short when you read it on a regulator's page years later. It feels a great deal longer from inside a company whose suppliers, landlord and staff all expect to be paid on a date that doesn't move because a provider somewhere has been told to stop. I find it hard to picture a payroll that survives 4 days without its operating account, though, and my guess is that most small firms holding everything at one e-money provider haven't tested it, and wouldn't know where to start. That's a guess, not a survey. As far as I can see, nobody has counted. I will not pretend to know how any particular provider in this index would behave under a similar order, and nothing they publish says.

The UK tightened the rules on 7 May 2026

The FCA published PS25/12 on 7 August 2025, and the rules became chapter CASS 15 of its Handbook 9 months later. Firms now reconcile safeguarded funds "at least once each day, other than weekends, public holidays and days when relevant foreign markets are not open". They keep a resolution pack. That's a folder of records meant to tell an administrator, on the first morning, whose money is whose, where it sits and which bank holds it, so that less time goes on rebuilding ledgers after a failure. They file a return within 15 business days of each month end, on form REP027. There's an annual audit too, unless a firm has not needed to safeguard more than 100,000 pounds over 53 weeks, and the report reaches the FCA within 4 months.

The FCA had floated a statutory trust as a later stage. It parked it, writing that it is "not proposing to implement the proposals without further consideration and consultation". I suspect that trust is the one change of the 2025 package a customer would have felt. So I'm still not convinced monthly returns replace it.

The EU sits a step behind. Its new payment texts have been negotiated, redrafted and voted in committee, and they still haven't reached the point where a company holding euro at a payment institution can read a final rule and plan around it. Parliament and Council reached a provisional deal on 27 November 2025, and the ECON committee approved the texts on 5 May 2026. On 1 August 2026 the Parliament's tracker still said close to adoption. I don't know the application dates, because the Council page I went looking for on 16 September sat behind a browser check.

None of this is a case against e-money institutions. I'd guess that splitting balances between a bank and an EMI suits more companies than picking one of the 8 accounts above and stopping there. It still bothers me, though, that a finance team can open an account from a phone in an afternoon and then need 2 registers and a statute to learn what stands behind it.