Deposit guarantee limit to be lowered

07/01/2010

People who hold transaction, savings and business accounts, as well as cash management, mortgage offset and term deposit accounts will be covered by the new federal government financial claims scheme that will guarantee deposits after the current scheme expires.

In October 2008, the government legislated to guarantee deposits of up to one million dollars for three years without charge to the customer.

Yesterday the banking system regulator, APRA, released a discussion paper outlining its proposals for an ongoing guarantee scheme to provide some security for depositors in the case of financial institution failure.

Accounts where deposits are linked to investments such as shares are not included in the proposed scheme. The proposed limit on the scheme is likely to be reduced from one million dollars and depositors will be eligible for only one payment, rather than one payment per account held.

Source: The Australian

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