Offset accounts and the Financial Claims Scheme (FCS)

What is the Financial Claims Scheme (FCS)?

The FCS - 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 (bank) 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 funded by Bendigo Bank), the FCS will only cover up to $250,000 per account holder in total under its licence.

What this means 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.

What about non-bank lenders?

While banks are covered by the Government's Financial Claims Scheme (FCS), non-banks are not covered by this scheme because they are not Authorised Deposit-Taking Institutions - (non-ADIs). How does this affect your home loan? Normally your home loan continues according to its terms and obligations, although the loan may be transferred to another lender or funding provider.

What this means in practical terms

For Qantas Money Home Loans funded by Bendigo Bank, the deposits held in offset accounts are covered up to $250,000 under the FCS. But, if you hold additional deposits with Bendigo Bank or any of its subsidiaries, you will still only be covered for up to $250,000 per account holder under the scheme. For Qantas Money Atlas Home Loans - which are funded by ColCap Financial, a non-ADI, the offset sub-accounts are not deposit accounts. This means those funds are not covered by the FCS.

You have to be a Qantas Frequent Flyer member to apply for a Qantas Money Home Loan. This website contains general advice only. This information has been prepared without considering your objectives, financial situation or needs. You should consider your circumstances before acting on this information.