The Financial Claims Scheme (FCS) ensures that depositors with credit unions, banks, and building societies are guaranteed repayment of their funds in the extremely unlikely event that any banking institution fails.
The FCS provides a guarantee of $250,000 per person per institution. That cap will take effect for all new deposits from 1 February 2012 and is the same for all institutions, whether they are banks, building societies or credit unions.
Existing deposits in place at 10 September 2011 have a continuing $1 million guarantee until December 2012. Transition arrangements are in place for deposits made between 10 September 2011 and 1 February 2012.
The Government introduced the FCS at the height of the global financial crisis in October 2008 to guarantee retail deposits held at authorised deposit‐taking institutions (ADIs). The initial cap was $1 million per person per institution. The Government also undertook to review these arrangements by October 2011.
The Government announced in December 2010 that the FCS would be retained as a permanent fixture in the financial services sector. In September 2011, after a review and a consultation process within the sector, the Government announced that the cap on guaranteed deposits would be set at $250,000 from 1 February 2012.
Heritage, along with all other credit unions, building societies and banks, meets exceptionally high prudential standards under the Banking Act, with strict oversight by the Australian Prudential and Regulation Authority (APRA). In addition, under the Banking Act, depositors are given priority over all other creditors in the event of the failure of an ADI. This depositor priority continues irrespective of Government guarantee provided by the FCS. While the Government guarantee is therefore unlikely to be required, it strengthens public confidence in the safety, stability and security of the Australian banking system.