The single most common question about UK Islamic banking is also the easiest to answer: yes, deposits at Britain's licensed Islamic banks are protected by the Financial Services Compensation Scheme exactly as conventional deposits are, up to 120,000 GBP per person per banking licence, the limit that took effect in December 2025. The complications live one layer down: which brands share a licence, which halal providers are not banks at all, and what happens to the profit element if a bank fails. Verified against our database on August 6, 2026.
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Who is covered
| Provider | FSCS status | Licence note |
|---|---|---|
| Al Rayan Bank | Protected to 120,000 GBP | PRA-authorised bank, own licence |
| Gatehouse Bank | Protected to 120,000 GBP | PRA-authorised bank, own licence |
| BLME | Protected to 120,000 GBP | PRA-authorised bank, own licence |
| Nomo | Protected, but shares BLME's limit | Trading name of BLME, same licence |
| QIB (UK) | Protected on eligible deposits | PRA-authorised bank (FRN 466577) |
| HBZ Sirat | Protected to 120,000 GBP | Window of Habib Bank Zurich plc's licence |
| Algbra wallet | NOT protected (safeguarded e-money) | FCA e-money institution, FRN 952360 |
| Algbra Saver Cubes | Protected to 120,000 GBP via Standard Chartered | Funds held at Standard Chartered (FRN 114276) while in a Cube |
| Kestrl | NOT protected (safeguarded e-money) | E-money issued by AF Payments Limited, FRN 900440 |
The rule that catches people: per licence, not per brand
FSCS limits apply per person, per authorised institution. Nomo is legally a trading name of BLME; its deposits sit on BLME's balance sheet, and the two share a single 120,000 GBP limit. A saver holding 100,000 GBP at BLME and 100,000 GBP at Nomo is 80,000 GBP over-exposed while feeling diversified. The same logic applies at HBZ Sirat: the protection attaches to Habib Bank Zurich plc, so Sirat deposits and any conventional HBZ deposits count together.
The flip side is the useful one. Al Rayan, Gatehouse, BLME and QIB (UK) each hold their own licence. A household with 400,000 GBP of savings can hold 120,000 GBP at each of Al Rayan, Gatehouse and BLME fully protected, before even using joint-account doubling. Large halal savers should plan licences the way conventional savers do.
Does Shariah structure change the protection?
No, and this deserves to be said clearly because the investment framing of Islamic deposits makes people nervous. Whether the account runs on a Wakala agency contract, a pooled expected profit model or anything else, an eligible deposit at a PRA-authorised bank is an FSCS-protected deposit. Al Rayan's pages state FSCS protection on eligible deposits at the 120,000 GBP limit; Gatehouse, BLME and HBZ Sirat state the same; QIB (UK) states FSCS protection on eligible deposits. The scheme protects your principal at the licensed banks regardless of how the return is generated. What FSCS does not protect anywhere, Islamic or conventional, is a rate: compensation covers your deposit, and questions about accrued expected profit in a failure are a matter of each product's terms.
Safeguarding is not FSCS, and the apps know it
Here is where honest labelling matters. Algbra and Kestrl are e-money propositions, not banks. Your balance is safeguarded: held in segregated accounts at credit institutions, so the firm cannot lend it, and you hold a redemption claim on it. If the e-money firm fails, you queue for the segregated funds through an administration process rather than receiving FSCS compensation within days. Safeguarding is a real protection with a genuinely different failure experience: slower, with administration costs potentially coming off the top, and no scheme guarantee of the full amount.
Algbra's cleverest feature exists precisely because of this gap. Its Ethical Saver Cubes move your money out of the e-money wallet and into fixed term Commodity Murabaha savings executed by Standard Chartered, and while the funds sit in a Cube they carry FSCS protection up to 120,000 GBP via Standard Chartered's licence. Spending money in the wallet: safeguarded. Savings in a Cube: FSCS-protected. One app, two protection regimes, and the difference is disclosed in Algbra's own documentation. Kestrl's balances, including money earning its 2.50% discretionary reward, are safeguarded e-money throughout, with no FSCS layer; the app's terms say so plainly.
How to structure a halal savings stack for protection
- Keep everyday spending money in an app if you like the features; keep it modest.
- Hold your emergency fund and serious savings at licensed banks: Gatehouse from 1 GBP, Al Rayan from 10,000 GBP, BLME from 1,000 GBP.
- Track balances per licence, remembering Nomo plus BLME is one licence, and Sirat means Habib Bank Zurich.
- Crossing 120,000 GBP at one bank? Open at a second licence before adding more; our savings comparison lists the candidates.
- Remember profit counts: a 118,000 GBP deposit earning close to 5% breaches the limit within a year if profit compounds into the same account.
Worked example: one family, four providers
Take a household with 300,000 GBP to place. A workable layout: 120,000 GBP in Al Rayan fixed terms, 120,000 GBP split across Gatehouse savings and its Cash ISA, 50,000 GBP at BLME's 90-day notice, and 10,000 GBP of everyday float in an Algbra wallet for spending. Every pound at the three banks is inside a separate FSCS limit; the app float is the only unprotected sliver, sized so its loss would be an annoyance rather than a disaster. Now the mistake version: 120,000 GBP at BLME and another 100,000 GBP at Nomo because the brands look different. Same licence, one limit, 100,000 GBP exposed. The fix costs nothing: move the Nomo slice to Gatehouse or Al Rayan and the whole sum is covered. Ten minutes of licence-checking is the highest-paid work in savings.
What actually happens in a failure
For a licensed bank, FSCS aims to compensate depositors quickly, and the scheme is funded by industry levies rather than by anything you claim on. You do not need to be Muslim, resident anything in particular, or holding a conventional account for it to work; eligibility attaches to the deposit. For an e-money firm, there is no FSCS payout: the safeguarded pool is reconciled and returned through the administration, which can take time. This difference, more than any rate, is why our guides keep repeating the same sentence: apps for spending, banks for saving. The full argument is in our bank versus fintech comparison.
Frequently asked questions
Is the 120,000 GBP limit per account or per person?
Per person, per licence. Joint accounts effectively double the cover at that institution since each holder has their own limit. Multiple accounts at the same bank share one limit.
Are non-residents covered?
FSCS eligibility attaches to eligible deposits at UK-authorised institutions rather than to your passport. Nomo, which exclusively serves Gulf-based customers, states plainly that deposits are FSCS-protected via BLME. Non-resident savers at HBZ Sirat hold deposits at a PRA-authorised UK bank the same way. Check each product's eligibility terms for edge cases.
Compare providers in your state
See side-by-side comparisons of Shariah-compliant products, or let our matcher recommend the best options for your situation.
Is a Shariah compliant account with FSCS cover a contradiction?
Scholars at every licensed UK Islamic bank have approved products that carry FSCS protection, and the banks advertise the cover openly next to their fatwa certificates. The scheme is a statutory safety net for depositors, not a contractual interest payment. If the interaction troubles you, the published fatwa certificates at Al Rayan and Gatehouse are the primary documents to read.