Answers · UK 2025/26
What is a structured deposit, and is it safe?
A structured deposit is a fixed-term savings product that links your potential return to the performance of a stock market index, rather than paying a fixed interest rate, while normally guaranteeing your original capital back at maturity. It is generally FSCS-protected like an ordinary savings account, but the potential return is uncertain and often capped, and early withdrawal can mean losing the capital guarantee.
Full answer
A structured deposit is a savings product, typically offered by banks and building societies, that promises to return your original capital in full at the end of a fixed term (commonly 3-6 years), while offering a potential additional return that depends on the performance of a specified stock market index (such as the FTSE 100) over that period, rather than a straightforward, guaranteed interest rate like a normal fixed-rate bond. If the linked index rises over the term (often subject to specific measurement rules, such as averaging the index level over the final months rather than using a single end date), the saver receives a return based on a percentage of that growth, frequently subject to a cap limiting the maximum possible return regardless of how much the index actually rises; if the index falls or is flat, the saver typically receives no additional return at all, but — critically, if the structured deposit is genuinely capital-protected — still gets their original capital back in full. Because a structured deposit is legally structured as a deposit (rather than an investment fund), it typically benefits from the same Financial Services Compensation Scheme protection (up to £85,000 per authorised institution) as an ordinary savings account, provided the provider is genuinely FSCS-covered — this distinguishes true structured deposits from riskier structured products or structured investments, which are not deposits and do not carry FSCS deposit protection, exposing the investor's capital to the issuing institution's creditworthiness (counterparty risk) as well as market risk. The main drawbacks are: your money is normally locked away for the full term with penalties or loss of the capital guarantee for early withdrawal, the potential return is capped so you do not benefit from very strong market growth the way a direct index investment would, and you earn nothing at all during long periods when the index simply does not grow enough to trigger the return condition, meaning a structured deposit can significantly underperform even a standard savings account over its term if the linked index performs poorly. Always confirm in writing whether a specific product is a true FSCS-protected deposit or a riskier structured investment before committing funds.
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This answer is informational only and does not constitute financial, tax or legal advice. Figures are for the 2025/26 UK tax year. See our methodology and sources.