Frequently asked questions about banking and the Financial Claims Scheme
The questions below provide general information about potential scenarios related to banking and the Financial Claims Scheme (FCS). Please contact your bank, building society or credit union for specific information about your accounts.
A list of account types covered by the FCS is available here.
You can also use our Deposit Checker page to help identify if your account is included.
Who is an account holder under the FCS?
An account holder under the FCS can be:
- an individual
- a body corporate (i.e. a corporation or propriety limited company)
- a body politic
- a partnership
- any other unincorporated association or body of persons
- the trustee(s) of a trust
- the trustee(s) of a superannuation fund (including a self-managed superannuation fund)
- the trustee(s) of an approved deposit fund.
Each account holder type listed above is entitled to protection for deposits up to $250,000 per ADI. Please note that a group of individual trustees of a trust, superannuation fund or approved deposit fund are treated as a single account holder.
The citizenship or residency status of an account holder does not have an impact on whether a deposit account is covered under the FCS.
What types of accounts are covered by the FCS?
How are joint account holders treated under the FCS?
For joint accounts, the amount of FCS protection is determined by splitting the deposit equally between the account holders. Each account holder's share is then added to any other eligible deposits they may hold under their own name at the same bank, building society or credit union before the $250,000 FCS limit is then applied to the total for each individual.
Alex and Peter have a number of accounts with their credit union:
- $300,000 in a joint account
- $50,000 in a separate account in only Alex’s name.
The FCS protects a total amount of deposits up to $250,000 for each account holder for each bank, building society and credit union. Therefore, Peter is covered under the FCS for $150,000 (half the joint account) while Alex is covered for $200,000 (being the sum of $150,000 from the joint account in addition to the $50,000 from his individual account).
How are multiple accounts at the same bank, building society or credit union treated under the FCS?
If an account holder has multiple accounts under the same name at the same bank, building society or credit union, then the total combined amount of these accounts would be covered up to the FCS limit of $250,000.
Mary has three protected accounts under her name with her bank:
- Account A with a balance of $100,000
- Account B with a balance of $100,000
- Account C with a balance of $100,000
Her combined balance is $300,000, however, the FCS only protects a total amount of deposits up to $250,000 per account holder per bank, building society or credit union.
Therefore should the FCS be activated for her bank, Mary would be protected up to $250,000 under the FCS, and the remaining $50,000 would not be protected. However, Mary may be able to claim her remaining $50,000, or at least some of it, in the liquidation of Mary's bank, depending on the assets available. Further information on the liquidation process is available on the Frequently asked questions about the activation, payments and administration of the FCS page.
If I have deposits of up to $250,000 in more than one bank, credit union or building society, will they all be covered under the FCS?
The FCS protects deposits up to $250,000 per account holder at each separate bank, building society or credit union (also known as authorised deposit-taking institutions, or ADIs). So a person can have up to $250,000 in deposit accounts with a number of different ADIs, and they will all be protected by the FCS.
It is important to note that some ADIs market themselves under more than one brand or trading name. For example, BankWest is part of the Commonwealth Bank, while St George is part of Westpac. Some banks also offer accounts under the name of a different company, such as a subsidiary of the ADI: for example, deposit accounts offered by RAMS are actually Westpac accounts. Some accounts may also be branded or marketed under the name of a third party, such as Bank of Queensland offering accounts under “Virgin Money Australia” name or National Australia Bank offering accounts under the “Citi” name.
So, a depositor might think they have accounts with two different banks, when both accounts are actually with the same institution. More information is available on our Different banking businesses under one banking licence page.
Susan has two bank accounts:
- $200,000 account with BANK A (which is licensed by APRA); and
- $200,000 account with BANK Z (which is part of BANK A, but operates under a different trading name).
As such, Susan actually has total deposits of $400,000 with Bank A ($200,000 from each account at 'BANK A' and 'BANK Z'). Consequently, Susan will only be covered up to the FCS limit of $250,000.
In the unlikely event that BANK A fails and the FCS is then activated, Susan may be able to claim the remaining $150,000, or at least part of it, through the liquidation of her bank, depending on what assets are available. Further information on the liquidation process is available on the Frequently asked questions about the activation, payments and administration of the FCS page.
Are non-Australian residents/citizens covered under the FCS if they hold a deposit account with an Australian bank, building society or credit union?
Yes as long as the deposits are held in an account with an Australian bank, building society or credit union, held in Australian dollars. The citizenship or residency status of an account-holder does not have an impact on whether a deposit account is covered under the FCS. However, irrespective of the residency status of an individual, deposits held with a foreign branch of an Australian bank are not covered under the FCS.
Are temporary large balances covered under the FCS (for example, funds from the sale of a property or a superannuation lump-sum payment)?
The FCS limit of $250,000 applies irrespective of the source or purpose of the funds, or the period for which the funds were intended to be held in an account. For amounts above $250,000, no additional protection is offered under the FCS.
How are business accounts treated under the FCS?
Business deposit accounts are treated in the same manner as other deposit accounts – they are covered under the FCS as long as the account satisfies the definition of an account that is protected under the scheme.
Business deposit accounts held by a sole trader are considered to be held in the name of the individual account holder and will be aggregated with other deposit accounts that are held by that account holder with the same ADI.
Business deposit accounts held in multiple, yet separate, individuals’ names are to be treated in the same manner as joint accounts, and the account balance split equally between all named account holders and aggregated with other applicable individual accounts.
All other business accounts where the account is held in the name of the business entity are treated as a separate account holder. For business partnerships see below.
How is a partnership account treated under the FCS?
This will depend on how the account has been set up and who is/are the named account holder(s). If the account is held or kept in the name of a partnership, that partnership will be the account holder. However business accounts held in multiple, separate names (that are not specifically set up as a partnership account) are treated in the same manner as joint accounts, and therefore the account balance split equally between all named account holders.
How are trust accounts treated under the FCS?
The trustee of a trust fund can be an account holder under the FCS and eligible to receive up to the $250,000 FCS limit in respect of the trust. Importantly, the $250,000 FCS limit applies to each corporate trustee or group of individual trustees of a trust, not to each individual trustee. For example, if a trust has four individual trustees, there would be one $250,000 limit for that group of trustees, not four times $250,000. Any FCS payments made in relation to the trust would be available for distribution to beneficiaries in accordance with the relevant trust’s deed.
Are mortgage offset accounts covered under the FCS?
Mortgage offset accounts that are separate deposit accounts are covered under the FCS. However, mortgage accounts with redraw facilities that are not separate deposit accounts are not covered by the FCS.
Are additional repayments against a mortgage or loan covered under the FCS?
Additional or advance repayments against a loan or mortgage are not covered under the FCS as they are not a deposit in a deposit account. However, in the unlikely event of the failure of a bank, building society or credit union (otherwise known as authorised deposit-taking institutions or ADIs), the additional repayments would not be lost as they would reduce the balance owing on the loan or mortgage. The outstanding balance of the loan or mortgage may then be transferred to another ADI or lender, a bridge bank or sold in the liquidation of the failed ADI. The borrower would receive instructions for making repayments to the new lender.
If I have a deposit account as well as a loan with my bank, building society or credit union, will the deposits be set off against the loan under the FCS?
No. Under the FCS, the account holder will receive the benefit of the FCS coverage up to $250,000 on their deposit account(s). However, the account holder will still be liable for the loan (and the repayments) and will likely receive instructions in relation to any loans from the statutory manager or liquidator that is appointed at the time of the FCS.
Is an amount placed in a superannuation fund's cash option at a bank, credit union or building society covered under the FCS?
An amount in a deposit account with a bank, building society or credit union held by a trustee on behalf of a superannuation fund is covered under the FCS up to $250,000. However, in most cases, the $250,000 FCS limit would be applied to the whole fund, not each individual member. As a result, depending on the size of the cash fund, it is likely that only a small portion of a member’s cash component will be covered by the FCS.
It is important to note that FCS protection only applies to the cash deposit component, not the other investment types.
Are self-managed superannuation funds (SMSFs) covered under the FCS?
The trustee of an SMSF that holds a deposit account for that SMSF with a bank, building society or credit union, is treated as an account holder under the FCS. Where an SMSF has a number of individual trustees, the trustees are collectively treated as an account holder. The $250,000 limit applies in relation to the SMSF as a whole. The FCS protection is extended to the trustee (or the individual trustees together) for the benefit of all the members of the SMSF.
Eliza has a joint account (held with one other person) with $90,000 and a self-managed superannuation fund (SMSF) account, for which she is a co-trustee, that contains $220,000. Both accounts are held at the same building society. For the purposes of the FCS, there is a different account holder for each of these two accounts – Eliza in her personal capacity as an individual and Eliza in her capacity as co-trustee of the SMSF. Consequently, Eliza is protected under the FCS for $45,000 in her personal capacity (comprising her half share in the joint account), and, together with her other trustees, for $220,000 in her capacity as co-trustee of the SMSF.
How is a combination of SMSF accounts and personal accounts with the same bank, building society or credit union covered under the FCS?
Because SMSFs are recognised as an account holder under the FCS, any additional accounts held by the trustees of the SMSF would be covered separately.
John, Jane and Lucy Smith have a number of accounts with their bank:
- $300,000 'Smith' Self-Managed Superannuation Fund (SMSF), with trustees John Smith, Jane Smith and Lucy Smith
- $100,000 in a joint account for John Smith and Jane Smith
- $100,000 in a personal account for John Smith
- $10,000 in a personal account for Jane Smith
Because SMSFs are recognised as an account holder under the FCS, the Smith’s SMSF would be covered separately up to the FCS limit of $250,000. The additional $50,000 above the FCS limit may be able to be claimed in the liquidation. Further information on the liquidation process is available on the 'Frequently asked questions about the activation, payments and administration of the FCS' page.
In relation to the joint and personal accounts, the FCS protects a total amount of deposits up to $250,000 for each account holder for each bank, building society and credit union. Therefore John Smith would be covered for a total of $150,000, consisting of $50,000 for the joint account and $100,000 for the personal account, while Jane Smith would be covered for a total of $60,000 which would consist of $50,000 for the joint account and $10,000 for her personal account.
If you are unable to find the information you are looking for on this page, please contact APRA . If you are seeking technical information on the implementation of the FCS go to the Financial Claims Scheme for authorised deposit-taking institutions.