Financial Claims Scheme (FCS) in 2026: What Every Australian Needs to Know

The Financial Claims Scheme is an Australian Government initiative designed to protect depositors and some insurance policyholders if their financial institution collapses. Managed by the Australian Prudential Regulation Authority (APRA), the FCS aims to return eligible funds quickly and securely to affected customers.

Key Protections Under the FCS

• Deposits: The FCS covers deposits up to $250,000 per account holder, per authorised deposit-taking institution (ADI). This includes banks, credit unions, and building societies that are registered as ADIs.

• General Insurance: The scheme also covers certain unpaid claims from general insurers, such as home and motor insurance, if the insurer becomes insolvent. However, it does not extend to all types of insurance.

If a participating bank or insurer fails, the FCS is activated by the government. For depositors, eligible funds are paid out—usually via direct transfer to another bank account—up to the coverage limit. For general insurance, the FCS pays valid claims that remain unpaid due to the insurer's insolvency.

Deposit Protection Example

Suppose you have $200,000 in a savings account at a single bank. If that bank fails, the FCS ensures you receive your full deposit back, up to the $250,000 limit. If you have more than $250,000 in total across accounts at the same bank, only the first $250,000 is protected.

Insurance Protection Example

If your general insurer collapses and you have an outstanding claim on a covered policy (such as home or motor insurance), the FCS will pay valid claims that have not been settled. It is important to note that the FCS does not cover all types of insurance. Life, health, and travel insurance claims are not included in the scheme. For these, you would need to rely on other regulatory protections or the financial strength of your insurer.

While the FCS provides a strong layer of protection, there are important limits and exclusions to be aware of in 2026:

• Coverage Limit: The maximum amount protected is $250,000 per account holder per ADI. This applies to the combined total of all eligible accounts you hold at a single institution.

• Joint Accounts: For joint accounts, each account holder is entitled to up to $250,000 of protection for their share of the account balance.

• Multiple Institutions: If you spread your deposits across different ADIs, each is covered separately up to the $250,000 limit.

• Exclusions: The FCS does not cover deposits with foreign bank branches operating in Australia, some credit unions that are not registered as ADIs, or investment products such as shares and managed funds.

• Insurance Exclusions: The scheme does not cover life, health, or travel insurance. For more information about these types of insurance, you can consult an insurance broker.

The FCS framework continues to adapt to changing financial conditions. In 2026, several updates have been made to improve the scheme's effectiveness and accessibility:

Improved Transparency

Financial institutions are now required to provide clearer information about FCS coverage. This helps customers understand which products and accounts are protected under the scheme.

Digital Claims Process

The process for making FCS claims has become more streamlined, with digital platforms allowing affected customers to initiate and track claims online. This change aims to speed up the return of funds and reduce administrative delays.

Public Awareness Initiatives

Efforts have been made to increase public awareness of the FCS, particularly among younger Australians and recent migrants. These campaigns focus on helping people understand their entitlements and how to check if their bank or insurer is covered by the scheme.

Understanding how the FCS works in real situations can help you make informed decisions about where to keep your money and which insurance policies to choose.

Scenario 1: Joint Account Holders

If two people jointly hold a $400,000 term deposit at a participating bank, each person is considered to own half of the account. In the event of the bank's failure, each account holder would be eligible for up to $250,000 in protection. Since each person's share is $200,000, both would receive their full share back under the FCS.

Scenario 2: Multiple Banks

A small business owner with $600,000 in deposits, split evenly across three different ADIs, would have each $200,000 deposit protected. This means the full $600,000 is covered, as none of the deposits exceeds the per-ADI limit.

Scenario 3: Insurance Claims

If a general insurer becomes insolvent and you have an outstanding claim on a covered policy, the FCS will pay valid claims that have not been settled. However, if your policy is for life, health, or travel insurance, these claims are not covered by the FCS.

It is important to recognise the limits of the FCS. The scheme does not protect:

• Deposits with foreign bank branches in Australia
• Investment products such as shares, bonds, or managed funds
• Life, health, or travel insurance claims
• Deposits with institutions that are not registered as ADIs

Before opening a new account or purchasing an insurance policy, check whether the institution is covered by the FCS. This information is typically available on the APRA website or by asking your financial institution directly.

With ongoing economic uncertainty and changes in the financial sector, Australians are increasingly concerned about the safety of their money. The FCS provides reassurance that, even in the unlikely event of a bank or insurer collapse, eligible deposits and certain insurance claims will be protected up to the scheme's limits.

As new digital banks and financial products emerge, the FCS continues to play a crucial role in maintaining public confidence. By staying informed about your coverage and regularly reviewing your financial institution’s status, you can help ensure your savings and insurance policies remain as secure as possible.

• The FCS protects deposits up to $250,000 per account holder per ADI and covers certain unpaid claims from general insurers.
• Not all financial institutions or insurance products are covered—check eligibility before making decisions.
• Recent improvements have made the FCS more transparent and accessible, with digital claims processes and increased public awareness.
• Understanding the FCS can help you make informed choices about where to keep your money and which insurance policies to trust.