The Australian Government guarantees your bank deposits up to $250,000 per person, per institution through the Financial Claims Scheme (FCS). This means if your bank, credit union, or building society were to fail, the government would step in and pay you back, typically within 7 calendar days. Here's exactly how it works, what it covers, and how to structure your savings to maximise protection.
How the FCS Works
The Financial Claims Scheme was introduced in October 2008 during the Global Financial Crisis to guarantee that Australians' savings are safe. Key details:
- Coverage: Up to $250,000 per person, per ADI
- Backing: The full faith and credit of the Australian Government
- Payout timing: APRA aims to pay out within 7 calendar days of activation
- Cost to you: Nothing. There is no fee, premium, or charge for FCS protection
The scheme applies automatically. You don't need to register, apply, or opt in. If you hold a deposit at an ADI, you're covered.
What's Covered
| Product | Covered? |
|---|---|
| Savings accounts | Yes |
| Term deposits | Yes |
| Transaction accounts | Yes |
| Cash management accounts (at ADIs) | Yes |
| At-call deposits | Yes |
| Business deposits at ADIs | Yes |
What's NOT Covered
| Product | Covered? |
|---|---|
| Shares and equities | No |
| Bonds (except deposit bonds at ADIs) | No |
| Managed funds | No |
| Superannuation | No (separate protection regime) |
| Cryptocurrency | No |
| Foreign bank branch deposits | No |
| Insurance products | No (separate PHCS) |
How the $250,000 Limit Works
The guarantee is per person, per ADI. This is important for understanding how to maximise your coverage:
Individual Accounts
If you hold $300,000 at a single bank, only $250,000 is guaranteed. The remaining $50,000 would be at risk in a failure scenario.
Multiple Banks
If you hold $200,000 at Bank A and $200,000 at Bank B, both amounts are fully covered because they are at separate ADIs.
Joint Accounts
Joint accounts are NOT treated as separate deposits with their own limit. Instead, your share of the joint account (typically 50%) is added to your eligible deposits held in your own name at that same ADI.
The Rule: The $250,000 limit applies to the total value of your individual accounts plus your share of any joint accounts.
Example:
- You have $200,000 in a personal savings account.
- You have a joint account with your partner worth $100,000 (your share is $50,000).
- Total Exposure: $250,000. You are fully covered.
If you already held $250,000 in your personal account, your $50,000 share of the joint account would be unprotected.
Business Accounts
A business entity (company, trust, partnership with an ABN) is treated as a separate depositor. So your personal deposits and your company's deposits at the same ADI each have their own $250,000 limit.
SMSF Accounts
An SMSF is also treated as a separate entity with its own $250,000 per ADI limit.
Brands vs ADI Licences
Some banking brands share an ADI licence. This is critical because the FCS limit applies per ADI licence, not per brand:
| Brand | ADI Licence Holder |
|---|---|
| CommBank | Commonwealth Bank |
| Bankwest | Commonwealth Bank |
| NAB | National Australia Bank |
| Ubank | National Australia Bank |
| Westpac | Westpac |
| BankSA, St.George, Bank of Melbourne | Westpac |
| UP | Bendigo and Adelaide Bank |
Critical implication: If you have $200,000 at NAB and $200,000 at Ubank, you only have $250,000 of FCS coverage because both brands operate under NAB's ADI licence. You would need to move some funds to a different ADI to be fully protected.
Has the FCS Ever Been Used?
No. Since its introduction in 2008, the FCS has never been activated. This is not because Australian banks haven't failed, but because APRA's supervisory framework intervenes before it gets to that point:
- Volt Bank (2022): Voluntarily returned its licence. All deposits returned.
- Xinja (2021): Voluntarily returned its licence. All deposits returned.
In both cases, APRA managed an orderly wind-down. The FCS exists as a safety net for scenarios where an orderly wind-down isn't possible.
How to Maximise Your Protection
If you have significant cash savings, here are practical strategies:
Strategy 1: Spread Across ADIs
Divide large balances across multiple ADIs (not just brands) to stay under $250,000 at each.
Strategy 2: Split Joint Accounts Across Banks
Since joint account balances are added to your individual limit, avoid keeping large joint and personal savings at the same ADI if it pushes your total share above $250,000.
Strategy 3: Use Different Capacities
Deposits held in different capacities (personal, business, SMSF, trust) each have separate FCS coverage at the same ADI.
Strategy 4: Check the ADI Register
Before depositing, verify the institution is an ADI on APRA's register. Also check which ADI licence a brand operates under to avoid double-counting.
Building Your Safety Net
The FCS is one of the strongest deposit guarantee schemes in the world. Your deposits up to $250,000 per ADI are guaranteed by the Australian Government, with no cost to you and no registration required. For balances above $250,000, simply spread across multiple ADIs. The safety of your savings at any Australian ADI is effectively guaranteed - the only action needed is ensuring you don't concentrate too much at a single institution.
Related Guides
- Best Savings Accounts - compare rates at guaranteed institutions
- Best Term Deposit Rates - lock in rates at FCS-covered banks
- SMSF Cash and Term Deposits - FCS implications for SMSF trustees
Frequently Asked Questions
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