The Financial Claims Scheme (FCS) is an Australian Government scheme that provides protection to deposits in banks, building societies and credit unions, and to policies with general insurers in the unlikely event that one of these financial institutions fails.
The FCS can only come into effect if it is activated by the Australian Government when an institution fails. Once activated, the FCS will be administered by the Australian Prudential Regulation Authority (APRA).
The FCS was established by the Australian Parliament in 2008.
The objectives of the Financial Claims Scheme are to:
- protect depositors of banks, building societies and credit unions incorporated in Australia, and policyholders of general insurers from potential loss due to the failure of these institutions
- provide depositors with prompt access to their deposits that are protected under the FCS
- support the stability of the Australian financial system.
Banks, building societies and credit unions
Under the Financial Claims Scheme, deposits are protected up to a limit of $250,000 for each account holder at each bank, building society and credit union that is incorporated in Australia and authorised by APRA. See the list of banks, building societies and credit unions that are covered under the FCS.
Banks, building societies and credit unions are also collectively referred to as authorised deposit-taking institutions, or ADIs, and are licensed to operate (or authorised) by the Australian Prudential Regulation Authority (APRA).
To find out more, including the types of accounts that are protected under the FCS, how joint accounts are treated, and what happens when a bank, building society or credit union operates other banking businesses, go to the Banks, building societies and credit unions page and the Banking FAQs page on this website.
If the FCS is activated by the Australian Government following the failure of a banking institution, APRA will endeavour to pay most account holders, or enable them to access, their FCS payments within seven calendar days.
If the Financial Claims Scheme is activated by the Australian Government, most claims made against a general insurer by their policyholders or people with valid claims against the insurer, are covered up to $5,000. Claims above $5,000 are also covered under the FCS for eligible policyholders and certain third parties.
In most cases, a claim can only be made against a failed insurer under the FCS if the insurance policy is issued by that insurer, and the event giving rise to the claim occurs before the FCS is activated by the Australian Government.
The FCS does not apply to life insurance companies or to private health insurers.
To find out more on how the Financial Claims Scheme works for general insurers see the General insurers page of this website.