Yesterday the Australian Prudential Regulation Authority (APRA) released a discussion paper detailing the proposed Financial Claims Scheme (FCS).
The paper details procedures ensuring when an Australian Deposit taking Institution (ADI) goes insolvent, there is adequate information to enable depositors to be paid promptly. This includes how end of day balances are calculated, potential payout options, the aggregation of accounts to ensure that each account-holder is able to be identified.
Last year in the U.S., the FDIC (Federal Deposit Insurance Corporation) closed 140 banks who where deemed insolvent.
ยป APRA consults on implementation of Financial Claims Scheme – APRA Media Release, Wednesday, 6th January 2010.
I think your headline is a little misleading. This is the practical implementation of the Government’s guarantee of deposits up to $1m (which as the media release states has been around since 2008), and not preparation for bank failures.
It does raise eye brows. As Poid says, this is the “practical implementation” of the Deposit Guarantee introduced some 16 months ago in October 2008. Considering the scheme only lasts for three years, one has to wonder why it’s taken 16 months to release a discussion paper?