Financial Claims Scheme (FCS) in 2025: What Every Australian Needs to Know

When economic uncertainty strikes, knowing your money is protected brings genuine peace of mind. That’s where the Financial Claims Scheme (FCS) steps in—a crucial safety net for Australians holding deposits in banks, credit unions, and building societies, as well as for some insurance policyholders. But what exactly does the FCS cover in 2025, and why is it more relevant than ever?

What is the Financial Claims Scheme?

First introduced after the global financial crisis, the FCS is an Australian Government initiative designed to protect depositors and policyholders if a bank, credit union, building society, or a general insurer collapses. It’s administered by the Australian Prudential Regulation Authority (APRA), and it ensures that eligible funds are returned quickly and securely.

• Deposit Protection: Covers deposits up to $250,000 per account holder per authorised deposit-taking institution (ADI).

• General Insurance Protection: Covers unpaid claims from certain general insurers, such as home and motor insurance, in the event of their insolvency.

Key Updates to FCS in 2025

The landscape of financial protection continues to evolve, and 2025 has brought several notable updates to the FCS framework:

• Increased Transparency: APRA now requires clearer disclosure by ADIs and insurers about FCS coverage, so consumers know exactly what’s protected.

• Digital Claims Process: FCS claims can now be initiated and tracked online, speeding up the process for affected depositors and policyholders.

• Expanded Public Awareness: A new national campaign launched in March 2025 aims to educate Australians—especially young adults and recent migrants—about their FCS entitlements.

Importantly, the $250,000 per account holder per ADI limit remains unchanged in 2025, despite calls for an increase in line with inflation. This means if you have $300,000 across multiple accounts at a single bank, only $250,000 is protected. However, if you spread your deposits across different ADIs, each is covered separately.

How Does the FCS Work in Practice?

Imagine a scenario: A regional credit union is declared insolvent by APRA. Within days, the FCS swings into action. Eligible depositors are automatically paid up to $250,000 per person per institution—usually via direct transfer to a nominated account at another bank. No forms, no lengthy court battles, and no need to join the queue of creditors. In 2025, this process is even faster thanks to upgraded digital infrastructure and streamlined data sharing between financial institutions and APRA.

For insurance, suppose your general insurer collapses after a major natural disaster. If you have an outstanding claim on a covered policy (such as home, contents, or motor insurance), the FCS will pay valid claims that remain unpaid. However, the scheme does not cover life insurance, health insurance, or travel insurance claims.

• Tip: Always check your insurer’s FCS eligibility on the APRA website, especially if you’re buying a new policy or switching providers.

FCS Limits, Exclusions, and Real-World Scenarios

While the FCS is comprehensive, it’s not unlimited. Here’s what to keep in mind in 2025:

• Coverage Limit: $250,000 per account holder per ADI—joint accounts are treated separately for each holder.

• Exclusions: Foreign bank branches, some credit unions not registered as ADIs, and certain types of investment products (like shares or managed funds) are not covered.

• Insurance Gaps: Life, health, and travel insurance claims are outside the FCS. For these, you’d need to rely on other regulatory protections or the insurer’s financial strength.

Consider the case of two siblings, Alex and Sam, who jointly hold a $400,000 term deposit at a major bank. If the bank fails, each is entitled to up to $250,000 under the FCS. Their joint account is split 50/50, so both would receive their full $200,000 share back—well within the FCS cap.

Meanwhile, a small business owner with $600,000 across three different ADIs would have each $200,000 deposit protected—total FCS coverage of $600,000, provided none of the deposits exceeds the per-ADI limit.

Why the FCS Matters More in 2025

With cost-of-living pressures and global financial volatility in the headlines, Australians are increasingly asking: “Is my money safe?” The FCS offers a clear answer, ensuring that the vast majority of individual and household deposits, as well as key general insurance policies, are safeguarded—even in the rare event of a financial institution collapse.

Recent APRA data shows Australians now hold over $1.3 trillion in FCS-protected deposits, with digital banks and neobanks seeing particularly rapid growth. As new players enter the market, the FCS remains a critical backstop—helping you save, invest, and insure with confidence.