Bank Guarantees To Be Withdrawn
The Council of Financial Regulators which is comprised of the RBA and the Treasury has announced that Government backed Bank Guarantees will be phased out from reports on SMH. It has decided that the worst of the economic conditions has now passed and the 150 odd financial institutions no longer need the tax payer backed guarantees.
Deposits of more than $1,000,000 will no longer be covered by the guarantee effective come the 31st March 2010. But accounts with deposits less than $1 million will still be covered until sometime into 2011.
Simon Reibelt from Oasis Home Loans Northern Beaches said the removal and downsizing of the Government’s Bank Guarantee was a positive move. It showed the economic and financial conditions in Australia had now improved to such an extent that the governing bodies considered the economy strong enough to hold its own . Along with the guarantee removal we would see improved competition between bank and non-bank lenders, as consumers now had a wider panel of lenders to choose where their finance would be sourced from.