All set for bank failure

Banks are expected to have plans in place to ensure account holders can be reimbursed within seven days in the event of a bank failure.

The Australian Prudential Regulation Authority released a new prudential standard yesterday which is intended to make the Financial Claims Scheme operative.

The Financial Claims Scheme protects depositors for up to $250,000 per account holder, per ADI, and aspires "to provide them with timely access to their deposits in the event that their ADI becomes insolvent and is declared by the Treasurer to be subject to the FCS," APRA said.

The prudential standard requires ADIs "to be operationally ready to meet payment, reporting and communications requirements should they be declared" under the FCS.

There are also requirements under APRA's prudential standard APS 910 that ADIs be able to produce a "single customer view" for each account holder, to facilitate fast payment.

APRA said the purpose of the standard was to ensure that in the event that an ADI is declared a failure "speed and security of payment is facilitated within seven calendar days."

Banks are supposed to be able to deliver the "single customer view" by January 2014 and also to prepare for "pre-positioning requirements for payments" by July 2014.