The Financial Claims Scheme (FCS) is an Australian Government deposit guarantee designed to protect depositors in the unlikely event an authorised deposit-taking institution (ADI) or an APRA-regulated general insurer in Australia fails. The FCS is designed to provide prompt access to deposits that are protected under the FCS (up to $250,000 per account holder, per ADI). Although it has only been activated once for a small general insurer in 2009, its existence helps to maintain confidence in the stability of the Australian financial system.
Key points covered
- FCS coverage
- Eligible ADIs
- Account types protected
- Activation of FCS
Who and what does the FCS cover?
Authorised deposit-taking institutions (ADIs)
For banks, credit unions, and building societies incorporated in Australia and authorised by APRA (all ADIs), the FCS covers deposits up to $250,000 per account holder, per ADI.
This includes account types like
- Transaction accounts
- Term deposits
- Savings accounts
- Farm management deposit accounts
- Separate mortgage offset accounts
Account holders can be individuals or entities, such as companies, trusts, or self-managed super funds.
Note: Some ADIs operate under multiple brands. This means deposits with these brands are counted together for FCS protection and this may impact a depositor’s total FCS coverage in the unlikely event that the FCS is activated.
The FCS does not apply to accounts including
- Accounts with funds that are not in Australian dollars
- Accounts kept at overseas branches of Australian banks
- Credit balances on credit card facilities or other loans
- Pre-paid card facilities or similar products
Activation of the FCS
In the unlikely event that the Australian Government activates the FCS, the Australian Prudential Regulation Authority (APRA) steps in to manage the process.
APRA has plans and protocols to deliver timely payment of depositor funds or policyholder claims.
If the FCS is activated, APRA and the impacted ADI will communicate directly with depositors/policyholders on any steps they need to take to access their FCS payment.
In most cases, FCS payment would be made either by cheque or electronically to a different account nominated by the account holder.
FAQs
What happens to amounts over $250,000?
If you have more than $250,000 with an impacted ADI the excess amount isn’t automatically lost. You may still be able to recover the funds above the FCS limit through the liquidation process of the failed institution. However, how much you get back depends on the assets available during the liquidation.
Are self-managed superannuation funds (SMSFs) covered under the FCS?
Yes, SMSFs, including SMSF term deposits, are covered under the FCS. The trustee (or group of trustees) of the SMSF is treated as a single account holder, and the $250,000 limit would be applied to the whole Fund, not each individual member.
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