What Is the Government Guarantee?
The Australian Government guarantees deposits up to $250,000 per person, per authorised deposit-taking institution (ADI). This safety net is formally called the Financial Claims Scheme (FCS), and it's administered by the Australian Prudential Regulation Authority (APRA).
In plain English: if your bank, building society, or credit union fails, the government will pay you back — up to $250,000 — for free, with no application required.
How Did It Start?
The FCS was introduced in October 2008 during the Global Financial Crisis. The original cap was $1 million per depositor per ADI, designed to stop a potential run on Australian banks. In February 2012, the cap was reduced to $250,000 — still generous by global standards.
The scheme has never been triggered for a major bank. Australia's "Big Four" (CBA, Westpac, NAB, ANZ) are among the most highly rated banks in the world. But the guarantee exists as a backstop for the entire ADI system, including smaller banks, credit unions, and building societies.
What's Covered?
The guarantee applies to deposits held with any ADI authorised by APRA. This includes:
- Savings accounts
- Transaction accounts
- Term deposits
- Farm management deposits
- First home saver accounts (legacy)
It covers the money you've deposited plus any accrued interest, up to the $250,000 cap.
What Counts as an ADI?
ADIs include all banks, building societies, and credit unions operating in Australia under an APRA licence. You can check whether your institution is an ADI on APRA's Register of ADIs.
Neobanks and fintech apps — some newer financial products are not ADIs themselves. They may partner with a licensed ADI to hold your funds. Always check whether your deposits are actually held by an ADI. If they are, the guarantee applies.
What's NOT Covered?
The FCS does not cover:
- Shares, bonds, or other investments
- Superannuation holdings
- Insurance policies
- Cryptocurrency
- Deposits with institutions that are not APRA-authorised ADIs
- Foreign currency accounts held offshore
It also does not cover amounts above $250,000 at a single ADI. Anything beyond the cap is treated as an unsecured claim in the institution's wind-up.
The $250,000 Limit — How It Works
The cap is per person, per ADI — not per account. Here's how that plays out:
| Scenario | Protected Amount |
|---|---|
| $200,000 in one savings account at Bank A | $200,000 (fully covered) |
| $300,000 in one savings account at Bank A | $250,000 (you lose $50,000) |
| $150,000 savings + $150,000 term deposit at Bank A | $250,000 ($50,000 unprotected) |
| $250,000 at Bank A + $250,000 at Bank B | $500,000 (fully covered — different ADIs) |
Joint Accounts
Each person's share of a joint account counts toward their individual $250,000 cap at that ADI. So a joint account with $500,000 shared equally is fully protected — $250,000 per person.
Company and Trust Accounts
Accounts held by companies, trusts, and self-managed super funds (SMSFs) get their own separate $250,000 cap per ADI, independent of the individual account holders.
How to Maximise Your Protection
If you have more than $250,000 in deposits, spreading your money across multiple ADIs is the simplest way to stay fully covered.
- Check your ADI — make sure your institution is APRA-authorised
- Add up all accounts at each ADI — savings, term deposits, and transaction accounts at the same ADI all count toward one $250,000 cap
- Spread across ADIs — each separate ADI gives you a fresh $250,000 of cover
- Watch for brand overlaps — some banks operate under the same ADI licence. For example, several brands may share a single ADI parent. Deposits across those brands still only get one $250,000 cap
What Happens If a Bank Fails?
If an ADI fails, APRA activates the Financial Claims Scheme. The government aims to pay out protected deposits within seven days. In practice:
- You don't need to apply — APRA uses the failed institution's records to identify depositors
- Payments go directly to depositors via electronic transfer
- APRA may appoint a liquidator to manage the failed institution's remaining assets
For amounts above $250,000, you become an unsecured creditor in the wind-up process. Recovery depends on the institution's remaining assets — it could be partial or nothing.
How Does Australia Compare Globally?
| Country | Guarantee Limit (AUD approx.) |
|---|---|
| Australia | $250,000 |
| United States (FDIC) | ~$400,000 |
| United Kingdom (FSCS) | ~$140,000 |
| European Union | ~$170,000 |
| New Zealand | $100,000 (from 2025) |
| Canada (CDIC) | ~$165,000 |
Australia's scheme sits among the more generous globally, particularly when you factor in joint account and trust protections.
The Bottom Line
The $250,000 government guarantee is one of the strongest consumer protections in Australian finance. For most people, it means your everyday savings are completely safe — even if your bank were to collapse.
But if you're sitting on larger balances (say, after selling a property or receiving an inheritance), it's worth spreading deposits across multiple ADIs to stay fully covered. It takes minimal effort and costs nothing.
When comparing savings accounts on MoneyMate, every product listed is from an APRA-authorised ADI — so the guarantee applies to all of them.