The Government today announced its reduced rates for the guarantee on deposits. It was a great result for consumers with amounts up to $250,000 covered in every approved deposit institution. While the Government says this will cover 99% of depositors, it also makes it relatively uncomplicated for everyone to enjoy the guarantee. Just don't have more than $250,000 in any one institution. Originally they were contemplating whether to bring the guarantee back to $100,000 and there was a fair bit of industry submission saying this was too low. Certainly for higher net worth SMSFs it would have become administratively burdensome to split deposit widely enough not to exceed this limit. The higher amount decided on however, allows for much more practical solutions for most funds.
The new cap is to apply from the 1st of February 2012. All deposits from now on that mature before or on 1 February 2012 will still be covered up to the current cap amount of $1million. Existing deposits that mature after that time will continue to be covered until the 31st of December 2012. Some of the other measures the Government plans to put in place are the removal from the scheme of foreign branches of Australian domiciled banks (so the guarantee works for money kept in Australia), look through provisions for pooled trust accounts (important for investors using master trusts), expanded payment options for APRA and allowing the Treasurer to activate a scheme earlier than at wind up (to allow refunding of money to investors sooner).
Its a good result for investors and shows a common sense approach.
