The Corporations Amendment Regulations 2010 (No. 2) will require authorised deposit-taking institutions (ADI’s) and general insurers to provide information relating to the Financial Claims Scheme (FCS) in Product Disclosure Statements.
The Financial Claims Scheme currently provides a free guarantee of deposits up to and including $1 million if an ADI becomes insolvent.
The Regulations will require ADIs and general insurers to disclose to account holders and policy holders in their PDSs relating to the FCS.
To maintain the PDS exemption for a basic deposit product; or a facility for making non-cash payments that is related to a basic deposit product or a traveller’s cheque, an ADI must disclose:
(i) the account holder may be entitled to payment under the financial claims scheme; and
(ii) access to the scheme is subject to a limit for each depositor; and
(iii) information about the financial claims scheme can be obtained from the APRA website at http://www.apra.gov.au and the APRA hotline on 1300 13 10 60.
General insurers must disclose that a statement that:
(i) the person entitled to claim under insurance cover under a protected policy may be entitled to payment under the financial claims scheme; and
(ii) access to the scheme is subject to eligibility criteria.
The disclosure requirements will commence for both general insurers and ADIs on 12 October 2011.
The Banking Amendment Regulations 2010 (No. 1) will ensure that a statutory manager can be appointed under the Banking Act 1959, notwithstanding the existence of external support arrangements such as the Government’s guarantee of deposits.
