Two fields change the $250,000 answer

A cash review invites a simple test: compare the balance with $250,000. That works only if the balance is being assessed against the right unit.

APRA's overview of the Financial Claims Scheme says deposits are protected up to $250,000 per account holder per ADI. Its deposit checker uses the fuller description: deposits are protected up to $250,000 for each account holder at each licenced bank, building society or credit union incorporated in Australia.

The practice consequence is a mapping task. A cash balance on its own does not show how the stated limit applies. The review needs to identify the account holder and the ADI for each deposit, then consider deposits where those two details are the same.

The account count is the wrong shortcut

The intuitive shortcut is to treat each account number as a separate protection bucket. If a client has several accounts, that approach appears to make the answer straightforward.

APRA's wording points elsewhere. The limit is expressed by account holder and ADI, not by the number of accounts. Several deposits involving the same account holder and the same ADI therefore need to be considered together when assessing how the limit applies. Deposits with different ADIs need to be identified separately.

That is the point a review process can lose. A file may contain a total cash figure and a list of accounts, while leaving unclear who is recorded as the account holder and which ADI holds each deposit. The resulting discussion can sound precise while still applying the $250,000 figure to the wrong unit.

A useful cash-review record should therefore make those two fields visible:

• the account holder recorded for each deposit
• the ADI holding each deposit

The terminology matters. APRA's description uses “account holder”. The review should use that term rather than substitute a broader concept such as legal ownership, which APRA does not use in the cited description.

Keep the protection question narrow

The Financial Claims Scheme is an Australian Government scheme that provides financial protection for consumers in the unlikely event of a failure of a bank, credit union, building society or general insurer. For deposits, APRA describes the relevant institutions as banks, credit unions and building societies incorporated in Australia, also known as authorised deposit-taking institutions or ADIs.

APRA says the scheme can be activated by the Australian Government in the unlikely event that an ADI or general insurer fails, and that APRA administers it once activated. APRA also says the scheme aims to return deposits to account holders within seven days of activation.

That description supports a careful client explanation. The question is whether the deposit is held by the identified account holder at the identified institution, within the bank, building society or credit union categories APRA describes. It is not enough to say that “the client's cash is covered”.

Make the file do the work

The adviser does not need a more elaborate explanation of the $250,000 figure. The adviser needs a review record that shows how the figure was applied.

A practical sequence is:

• 1. Identify the account holder recorded for each deposit.
• 2. Identify the ADI holding each deposit.
• 3. Group deposits by account holder and ADI.
• 4. Apply APRA's $250,000 per account holder per ADI description to that map.

This turns a familiar client question into a repeatable practice task. It also prevents the account count from becoming a substitute for the facts that define the protection boundary.