The Prudential Regulation Authority plans to cut the Financial Services Compensation Scheme protection limit for savers from £85,000 to £75,000.
The FSCS protects deposits up to £85,000 in the event of the failure of a bank, building society or credit union.
The existing £85,000 limit will remain in place until 31 December to allow savers to plan for and adjust to the change.
From today, depositors with “temporary high balances” will be covered up to £1m for six months from the date on which the money is transferred into their account, or the date on which the depositor becomes entitled to the amount.
The compensation limit originally set at was set at €100,000 (£71,000) in December 2010.