As the pace of regulatory change increases, institutions that invest in continuous data readiness will be
best placed to protect customers, support financial stability, and adapt to the next wave of change, says
Matt Flenley of Datactics
Following its statutory five-year review, the Prudential Regulation Authority (PRA) confirmed that the Financial Services Compensation Scheme (FSCS) deposit protection limit has risen from £85,000 to £120,000. The increase reflects higher levels of savings, inflationary pressures, and the broader need for stronger safeguards across the UK financial system.
For consumers, this is undoubtedly a positive impact, as higher coverage means greater confidence in the stability of the banking system, and better protection should an institution fail. Even though this change appears simple on the surface, it highlights a much larger underlying issue of the level of data readiness required within banks to implement regulatory updates smoothly and accurately.
Even modest adjustments demand accurate customer records, clean Single Customer View (SCV) files, and consistent data governance. For many firms, this is where the real work begins. While the threshold increase strengthens consumer protection, many banks still lack the flexible data foundations needed to update systems, customer records, and SCV files at the speed regulators now expect.
Banks need time to prepare to update their systems, validate data, and ensure audit readiness, aiming to strengthen consumer confidence, improve financial stability, and keep the UK competitive in its depositor protection levels with other leading economies.
As the PRA continues its periodic reviews, further adjustments are likely. Even though the FSCS itself is a technically straightforward update, banks and building societies must still ensure that their systems, customer records, SCV files, and broader data governance processes are fully compliant. The PRA expects firms to implement changes swiftly while maintaining accuracy under the evolving Depositor Protection Rules.
Regulatory change is accelerating
The FSCS limit increase is just one sign of a broader trend of a rapidly evolving financial ecosystem, alongside market volatility, regulatory change inflation, fraud risks, and international alignment. Banks cannot rely on slow, once-a-year updates anymore.
While the FSCS itself is a simple adjustment, it highlights the increasing pace of regulatory shifts and the reliance on high-quality data to implement even straightforward changes accurately.
Banks need to prepare for ever-increasing regulatory scrutiny of their data, including the prospect of open access to their data for external validation and regulatory reporting. This would see an inversion of the current process of banks compiling their regulatory returns and reduce barriers for regulators to assess the data themselves. Any data-driven validation process that aligns banks and regulators to one common standard can therefore be seen as highly useful and productive in this context.
For consumers, this is good news. Stronger, more data-led oversight means more accurate depositor protection, faster remediation when issues arise, and a financial system more resilient to shocks. For banks, however, it places growing emphasis on the need for high-quality, consistent, and accessible data.
“Outdated systems and fragmented customer data make requisite regulatory updates extremely difficult”
The hidden operational challenge for firms beyond FSCS compliance
Outdated systems and fragmented customer data make requisite regulatory updates extremely difficult. Most financial services firms still run on siloed systems and inconsistent customer records, so any SCV issues, duplicate data, and outdated infrastructure make any regulatory shift painful. Poor data governance slows compliance and increases audit risks.
This is especially valid in insurance, where there is a high level of mergers and acquisitions. On a commercial basis, these mergers and acquisitions make a lot of sense in adding customers and value to the business. However, from a data perspective, models and systems are rarely aligned, and behind the scenes the data teams are struggling to connect the dots, avoid duplication, and reduce the risk of fraud or data security events.
So, although changes such as the FSCS limit may be technically straightforward, implementing them across large, complex financial institutions often is not. This fragmentation means that tasks such as updating SCV files, recalculating depositor protection, or validating customer balances become disproportionately burdensome. Institutions must reconcile inconsistent records, identify duplicates, eliminate false positives, and ensure that customer datasets are complete and correct, all under regulatory time pressure.
Regulatory audits sometimes generate false positives or miss legitimate duplicate records. This places additional pressure on banks to ensure their internal systems can detect, match, and reconcile customer data more thoroughly than minimum regulatory checks.
It is common for supervisory bodies to be cautious, flagging potential mismatches even when many turn out to be false positives. Institutions with more reliable matching processes reduce the time spent resolving these checks and ensure consumers are accurately protected. Inaccurate or incomplete data not only slows down compliance work. It increases the risk of errors, audit findings, and ultimately, delays in providing consumers with the protection they are entitled to.
The FSCS update, therefore, acts as a timely reminder that data quality is not only an operational issue, but it is foundational to consumer protection and financial stability.
Building continuous data-ready compliance
Banks need systems that can adapt to future regulatory adjustments, so adding flexible, automated data validation can help reduce risk, speed up compliance, and keep up with ever-evolving depositor protection rules.
As the pace of regulatory change increases, banks are shifting from event-based compliance, where systems are updated only when a new rule is introduced, to a model of continuous data readiness. This approach of continuous data readiness emphasises consistent, ongoing data governance, which can reduce the reliance on manual reconciliation, ensuring that customer records are accurate, complete, and fully reconcilable at all times.
It strengthens audit outcomes, supports fair and timely depositor protection, and enables institutions to respond calmly and efficiently to regulatory demands. It reduces operational bottlenecks, minimises reliance on manual reconciliation, and helps align compliance and data teams more closely. As a result, banks become less reactive and more resilient even as regulatory expectations evolve.
For consumers, this directly translates into smoother FSCS payouts, fewer errors or delays, and greater trust that their financial institution can meet its obligations during a period of stress. For institutions, it enables a more resilient, less reactive compliance posture, one that can accommodate regulatory change without disruption.
Strong systems start with stronger data
FSCS is simple, but the message is bigger: that robust data is now central to consumer protection. The PRA’s decision to raise the FSCS limit is a strong step toward ensuring consumer confidence in an evolving financial landscape, but beneath this straightforward regulatory move lies a more complex reality, that without reliable, high-quality, and well-governed data, even simple updates can become operationally demanding.
As regulatory expectations continue to evolve, institutions that invest in continuous data readiness – not as a single project but as an ongoing discipline – will be best placed to protect customers, support financial stability, and adapt to the next wave of change.
About the author
Matt Flenley is Head of Product & Marketing at Datactics.
