Compo plan proposed for insurers, banks

The Australian Prudential Regulation Authority wants the Federal Government to establish a formal compensation scheme so that victims of institutional collapses are partly bailed out.

The scheme would cover banks and other deposit-taking institutions, general and life insurance companies, and superannuation funds. APRA's preferred model is one in which moneys for a bailout are collected after a collapse, the model which has been used recently in the cases of two small super funds and Ansett.

APRA said that Australia is one of the few OECD countries without such a bailout plan.

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