The highly developed market economy of Australia is dominated by its service sector. The financial industry plays an important role and contributes to economy stability. Public confidence and private wealth is high, while average debt is low. Australian financial institutions are safe and stable. To maintain this position and avoid public mistrust, economic liberalization and financial deregulation has reached a ceiling. Alongside minimum capital requirements and other internal risk management tools, deposit insurance provides creditors of authorized deposit-taking institutions with comprehensive safeguards.
Deposit Guarantee Scheme (Australia): Bank deposit protection in Australia is managed by the Financial Claims Scheme (FCS). The scheme protects account balances in Australian Dollar held with Australian incorporated banks, building societies, credit unions, and insurance policy holders and claimants.
Secured Deposit Limit: $ 250.000 per account holder per institution.
Additional Compensation: Account holders with balances that exceed the secured limits are subject to bank resolution, civil action and insolvency proceedings to recover the remaining part of their assets. The Australian government however does everything it can to avoid a disruption of the local payment system. Alongside its function as a lender of last resort, additional measures can be taken. For example, in the wake of the global financial crisis, the Australian Government Guarantee Scheme provided financial support for authorized deposit taking institutions.
Claim Filing Procedures: The FCS is activated by the Australian government in the unlikely event that an ADI or general insurer fails. The scheme aims to repay eligible deposits to account holders within seven days of the activation of the scheme. Payment is made by checque or electronically to an alternate account nominated by the account holder.
Repayment Conditions: In the event of failure of an FCS member institution, the Australian Prudential Regulatory Authority (APRA) and the failed financial institution communicate directly with account holders on the procedures to file a claim for reimbursement of the insured deposit and FCS repayment.
Exclusions from Coverage: In line with the objectives of the FCS, several deposits are excluded from deposit insurance. These include deposits in currencies other than Australian Dollars, deposits held at overseas branches of Australian banks, credit balances on cards and other loans, pre-paid cards and similar products, correspondent balances at nostro or vostro accounts outside Australia.
Financial Structure: FSC members make financial contributions to the scheme to ensure ex-ante stability of the scheme. These contributions are based on the scheme, the number and size of the insured deposits and the risk profile of the institution and customer base.
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