Deposit Guarantee

The Government Deposit Guarantee

On 12 October 2008, the Australian Government announced temporary arrangements to enable the provision of a guarantee for the deposits and wholesale funding of Australian deposit-taking institutions. In the lead up to this announcement, developments in international wholesale funding markets were restricting the ability of financial institutions both here and overseas to access funding, with potentially serious implications for liquidity and lending activity.

To address these pressures, the Government guarantee arrangements were designed to promote financial system stability in Australia, by supporting confidence and assisting authorised deposit-taking institutions (ADIs) – banks, building societies and credit unions – to continue to access funding at a time of considerable turbulence. They were also designed to ensure that Australian institutions are not placed at a disadvantage compared to their international competitors that could access similar government guarantees on their wholesale funding.


A new permanent cap of $250,000 per person per institution on deposits guaranteed under the Financial Claims Scheme took effect from 1 February 2012. This new cap was announced by the Treasurer on 11 September 2011. A grandfathering provision has been put in place for term deposits that existed on 10 September 2011. For these deposits, the $1 million cap will apply until the earlier of either:

  • the maturity date – for term deposits which mature between 1 February 2012 and 31 December 2012; or
  • 31 December 2012 – for term deposits which mature on or after this date.

The new $250,000 cap will then apply.

For term deposits opened or rolled over after 10 September 2011, the $250,000 cap applies from the 1 February 2012. If a term deposit rolls over, the rollover date is taken to be the maturity date for the purpose of the FCS. The Financial Claims Scheme is administered by the Australian Prudential Regulation Authority, so inquiries should be directed to their hotline on 1300 558 849. APRA has also provided a questions and answers summary of the Financial Claims Scheme on their website.