Australian Government guarantee

On the 12th of October 2008 the Australian Government put in place far reaching guarantee arrangements for deposits with eligible Authorised Deposit – Taking Institutions (ADIs). Known as the Financial Claims Scheme, initially all deposits were covered but from November 28 2008 a cap of $1 million per account-holder, per ADI was put in place. There was, and is, no charge for accessing the Financial Claims Scheme to the depositor.

Around the same time in 2008 the government also introduced the Guarantee Scheme for Large Deposits and Wholesale Funding, which should not be confused with the financial Claims Scheme. This scheme attracted a fee to guarantee large deposits and securities based funding, paid by the ADI and ended in March 2010.

Initially the Financial Claims Scheme (FCS) was to end on October 12 2011 but on September 11 2011 the government announced the FCS would be a permanent feature of the banking landscape and changes to the guarantee cap were made, as outlined briefly below:

  • Deposits placed prior to September 10 2011 are covered up to a cap of $1 million until maturity or December 31 2012, whichever occurs first.
  • Deposits placed after September 10, 2011 are covered, up to a cap of $1 million, until January 31 2012 and then from February 1, 2012 they are covered up to a cap of $250,000 only.
  • Deposits placed from February 1, 2012 and onwards are covered up to a cap of $250,000 until maturity.
  • The Government retains the right however to adjust the guarantee cap in response to global financial circumstances should the need arise.
  • The FCS applies to Authorised Deposit-Taking Institutions incorporated in Australia. This includes Australian Banks, Building Societies and Credit Unions and Foreign Subsidiary Banks. The FCS does NOT apply to branches of foreign banks.

For more detailed information on the FCS please follow this link to the Australian Prudential Regulation Authority’s website

Or this link:

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