The Government recently announced changes to the Financial Claims Scheme more commonly known as the $1m Bank Guarantee.
What has the Government announced?
On 11 September 2011 the Australian Government made three key announcements.
1. Existing $1 million cap – will continue to apply until 1 February 2012
2. Permanent cap introduced – a permanent guarantee cap will be introduced from 1 February 2012, subject to the continued advice of financial regulators that this remains appropriate
3. Amended cap level – from 1 February 2012 the permanent guarantee cap will be revised to $250,000 per account holder per institution.
How will this affect my accounts?
Effective from 1 February 2012 the guarantee will apply to aggregate retail cash deposits of up to $250,000 held by any one account holder with an eligible institution.
This new guarantee cap will be permanent, which the Government comments is subject to the continued advice of financial regulators that it remains appropriate.
As part of the proposal foreign branches of Australian incorporated credit unions, building societies and banks will not be covered.
Consideration can be given to spreading deposits across eligible institutions to ensure the $250,000 limit is not exceeded with any single institution.
Is this amended cap effective now?
No. The permanent guarantee cap will be introduced from 1 February 2012. The Government commented that it has provided over four months’ notice to allow sufficient time for institutions to communicate the changes and transition to the new settings.
The existing $1 million cap will continue to apply until the permanent $250,000 cap comes into effect on 1 February 2012.
Where can I go for further information?
For further details about these announcements please click here to view the Government’s announcement.
