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Decoding the Financial Claims Scheme for SMSFs

Written and accurate as at: Apr 29, 2020 Current Stats & Facts

The financial shock caused by the coronavirus has resulted in many SMSF trustees revisiting risks to their fund assets. Today we address the Financial Claims Scheme (also known as the banking deposit government guarantee), and how it may relate to your SMSF.

Financial Claims Scheme 

Introduced in the wake of the GFC, the Financial Claims Scheme (FCS) is an Australian Government initiative that protects deposit-holders.

The scheme was designed by the government to protect deposit-holders in the unlikely event of a failure in an Australian incorporated bank, building society or credit union (known in the scheme as authorised deposit-taking institutions or ADIs).

The scheme is administered by the Australian Prudential Regulation Authority (APRA). You can access a comprehensive list of ADIs on their website.

Since its introduction, the FCS has been modified to reflect the improved strength of Australia's financial institutions. The FCS currently protects deposits made at ADIs, offering protection for each account holder up to $250,000 in the case of the ADIs insolvency.


SMSFs are listed as account holders in the FCS and as such, are eligible for cover up to $250,000 collectively.

Any SMSF is treated as a single account holder and will not be eligible for additional protection based on the number of trustees.

The FCS protection is extended to the trustee/s for the benefit of all members of the SMSF. It is also worth noting that there is separate protection for any personal accounts held by the trustees of the SMSF.

An account holder, as defined by APRA, includes:

  • An individual
  • A body corporate
  • A body politic
  • A partnership
  • Any other unincorporated association or body of persons
  • A trust
  • A superannuation fund (including a self-managed superannuation fund)
  • An approved deposit fund

Subsidiary banks

It is important to note that the FCS limit of $250,000 applies to the total amount of an account holder's deposits with each licensed ADI.

This limitation is critical as some large ADIs operate multiple banking businesses under the one banking licence or offer deposits through third parties. For example, St George is part of the Westpac Group which also offers deposits through RAMS. BankWest is part of the Commonwealth Bank, and UBank is a division of NAB.

Account holders with multiple deposits may believe they are depositing with two different ADIs when both accounts are in fact under the same banking licence. In this instance, the account holder will only be eligible for the FCS limit of $250,000.

Case study

Mary and John Jones have several deposits with their bank and its subsidiary:

  • $50,000 in transactional account with Bank A and $250,000 in a fixed deposit account with Bank A's subsidiary within the 'Jones' Self-Managed Superannuation Fund (SMSF), with individual trustees Mary and John Jones
  • $200,000 in a joint account for Mary and John Jones
  • $100,000 in a personal account for John Jones
  • $20,000 in a personal account for Mary Jones

As an SMSF is an account holder under the FCS, the Jones's SMSF is covered up to the FCS limit of $250,000. The additional $50,000 above the FCS limit may be able to be claimed as part of a liquidation.

Joint and personal accounts are protected separately to a total of $250,000 for each account holder for each ADI. In this case study, John is covered for a total of $200,000, consisting of $100,000 for the joint account and $100,000 for the personal account. Mary will be covered for a total of $120,000 which consists of $100,000 for the joint account and $20,000 for her personal account.


As an SMSF trustee, you should consider the following key actions to protect your cash deposits:

  • Split deposits between banks if you have more than $250,000 accumulated and want full protection under the FCS
  • Read the fine print usually found at the bottom of your bank's website or official documents to see which banking licence the institution operates under
  • Regularly review the FCS levels and your overall deposit balances
  • Speak with a professional who can provide you with unbiased and free of conflict advice to assist in managing the risks within your fund

The above considerations will take time. However, the additional protection offered in the event of a worst-case scenario may be worth it.

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