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Community First Members are eligible for the Australian Government Deposit Guarantee
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The Government has announced changes to the Financial Claims Scheme with the cap being reduced to $250,000 from 1 February 2012.
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What does this mean?
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The Financial Claims Scheme ensures that depositors with credit unions, banks, and building societies will be guaranteed repayment of their funds in the extremely unlikely event that any banking institution faces stress. The Scheme includes a guarantee of $250,000 per person per institution. Existing term deposits in place at 10th September 2011 have a continuing $1 million guarantee until December 2012.
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Read more about the changes >
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Community First is safe and secure
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FACT: Community First is strong and secure for all Member deposits. This includes those deposits above $1 million. Some of those key indicators of our financial strength and stability include:
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(a) Capital Adequacy Ratio in excess of 15% (banks are only approximately 10%)
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Capital is the cornerstone of financial strength. Capital exists to provide a buffer to absorb unanticipated losses and, in the event of problems, allows the financial institution to continue to operate whilst the problems are being resolved. Community First has a strong capital position, currently standing at around 15.5% which compares to Australian Banks sitting at around 10% (i.e. 50% stronger than Australian Banks)
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(b) Over $54 million in reserves
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What this means is that in the unlikely event of financial difficulty, after paying all our debts (including deposits) out of our assets, Community First would still have approximately $54 million left to distribute to our Members.
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(c) Refer our Annual Report for further details
FACT: The reality of the Australian Government Guarantee is that it is the ADI itself that retains the ultimate guarantee over the deposit (albeit, indirectly).
What this means is that the ADI is required to indemnify the Government against all claims and losses of the Scheme. So in the unlikely event that the credit union experiences financial difficulties and the guarantee was enacted, it is the credit union who must repay the Government for the guarantees it has paid to depositors. Depositors also have additional protection under the Banking Act which provides depositors first priority over assets.
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FACT: Community First is NOT directly exposed to sub-prime markets. Community First has conservative lending practices designed to lend only to Members who can afford the loan, and we do not invest in overseas markets.
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FACT: Community First is NOT exposed to the wholesale funds market. It is the banks exposure that the international wholesale funds market (i.e. sourcing funds from overseas) that is the primary driver for the Australian Government having to guarantee deposits in Australia. This was in response to a number or foreign governments providing guarantees for their local banks (which would have meant a higher cost of funds for our local banks for their international wholesale market). Community First Raises its funds from Members in the form of retail deposits so our model is much more conservative and does not generally involve the wholesale markets at all. 94% of Community First’s loans are funded by Member deposits (within the Australian market), being predominantly savings and term deposit accounts. The remaining 6% is funded by short-term borrowing.
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Strict Australian regulation protects your deposits
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Community First, as an Authorised Deposit-taking Institution (ADI), is regulated under the Banking Act and meets the same high standards of prudential regulation as banks with full regulatory oversight by Australian Prudential Regulation Authority (APRA), the prudential regulator.
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Putting Member interests first for 50 years
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The Government guarantee will apply for at least three years. As a mutual, we are owned by our Members. Therefore, our focus is on your interests, and we are conservative and careful managers of our Member’s money. That’s been our Member “guarantee” for 50 years!
Your savings with Community First are now backed not only by our strong performance and Member focus, but also by the Government guarantee.
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Community First’s deposit accounts that are covered by the Guarantee
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| | | - Everyday access account for regular transactions
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| | - Everyday access account for regular transactions (balance > $5,000)
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| | - Savings account with bonus interest upon conditions
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| | - Savings account with limited period of withdrawal availability
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| | | | - Transaction savings account for holders of Seniors or Pension card or self-funded retirees (>55)
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| | - Online Savings account for Businesses, DIY Super and Trusts
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| Easy Savings Online Savings
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| | | - Offset account for mortgage
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| | - Special savings account that has been developed for Members aged 3 to 11 years
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| | - Restricted to 12 to 17 year olds only
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| | - Everyday access account for regular transactions – for students aged 17-24 years
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