Financial Claims Scheme

The purpose of the Financial Claims Scheme (FCS) is to protect depositors of authorised deposit-taking institutions (banks, building societies and credit unions) and policyholders of general insurance companies from potential loss due to the failure of these institutions. In the unlikely event an APRA-regulated institution were to fail, APRA has the role of administering the FCS when activated by the Australian Government.

The CFR played a key role in advising the Government on the development of the FCS:

  • In November 2005, the CFR advised the government on a package of measures for dealing with distressed financial institutions. This included the proposal for a scheme that would provide depositors in a failed authorised deposit-taking institution (ADI) and policyholders in a failed insurer with timely access to their funds up to a certain limit.
  • In late 2008, the CFR played a critical role at the height of the global financial crisis, providing advice to the government on improving Australia’s crisis management arrangements. This included advice on the introduction of the FCS as well as a Guarantee Scheme for Large Deposits and Wholesale Funding. Both arrangements became operational in November 2008.
  • At the request of the government, the CFR undertook an assessment in 2010 of whether the structure of the FCS was suitable for the post-crisis environment. Its advice informed the government’s revised arrangements for the FCS, including a lowering of the cap, which were subject to a public consultation process before their finalisation in 2011.