Offset accounts and the Financial Claims Scheme

What is the Financial Claims Scheme (FCS)?

The FSC - otherwise known as the deposit guarantee - is an Australian government initiative guaranteeing the deposits of Authorised Deposit-taking Institution (ADI) account holders in the event of institutional failure.

This means that if your bank is unable to honour deposits for account holders, the government will compensate your loss up to a maximum of $250,000.

How the FCS works:

• In the event of an ADI failing, the FCS guarantees the deposits of each account holder - up to an amount of $250,000 - per account holder, per ADI.

• Joint accounts are covered for each account holder under the scheme. So, if a couple has a shared account worth $600,000, then the FCS covers them for a total of $500,000.

• While home loan offset accounts are covered under the FCS, redraw balances (which aren’t separate deposit accounts) are not. This means if you’re making additional repayments on your home loan to potentially redraw in the future, this cash is not protected under the FCS.

• In the event a bank has subsidiaries, or it is the funder behind a home loan program (such as Qantas Money Home Loans) the FCS will only cover up to $250,000 per account holder in total under its licence.

What does this mean in practical terms?

For Qantas Money Home Loans, the deposits held in offset accounts are covered up to $250,000 under the FCS. But, if you hold additional deposits with Bendigo and Adelaide Bank Ltd or any of its subsidiaries you will still only be covered for up to $250,000 per account holder under the scheme.

For a full list of ADIs covered by the scheme, please visit APRA.

^* You have to be a Qantas Frequent Flyer member to apply for the Qantas Home Loan. This information has been prepared without considering your objectives, financial situation or needs. You should consider your circumstances before acting on this information.