The Prime Minister announced on the 12 October 2008 a scheme to guarantee all deposits held in credits unions, building societies and banks in Australia. The Scheme ensures that depositors with Australian credit unions, banks, and building societies will be guaranteed repayment of their funds in the extremely unlikely event that any banking institution faces stress.
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Recent changes to the scheme don't affect existing Easy Street Members
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More recently, it was announced that effective from 31 March 2010, the guarantee would no longer apply to deposits greater than $1 million, but would continue to apply to all deposits up to $1 million until at least October 2011.
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Summary of changes
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| Deposits of up to $1m per Member are still covered under the existing government guarantee, which is in place until at least October 2011.
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| Deposits greater
than $1m
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| Members have had the option to pay a premium for the guarantee for that amount greater than $1m. This will no longer be available from 31st March 2010.To date, no Members have opted to take up the guarantee on deposits over $1 million.
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Easy Street is powered by Community First Credit Union. View industry facts and figures about what makes credit unions so strong.
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Stronger than ever
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Unlike the Australian Banks whose wholesale (international) exposures are a major reason for the Australian Government guaranteeing all Australian deposits, we source most of our funds from local retail deposits. We only lend to you (our Members) for personal loans and to purchase residential property in Australia with 94% of Community First’s loans funded by our own Member deposits (within the Australian market). This is predominantly savings and term deposit accounts! The remaining 6% is funded by short-term borrowing.
We have no direct exposure to any ‘sub-prime’ markets or loans, nor have we invested in securities based on sub-prime loans.
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Strict prudential standards
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Community First Credit Union, who is the provider of Easy Street Financial Services, is an Authorised Deposit-taking Institution (ADI). As an Authorised Deposit-taking Institution (ADI), Community First, just like the big banks, operates under the Commonwealth Banking Act 1959. The Australian Prudential Regulation Authority (APRA) also applies very strict prudential standards on all credit unions, building societies and banks for capital, liquidity and credit risk. Easy Street Members are therefore protected in the same ways that Community First Members are.
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There is no real difference in a regulatory sense between a bank, building society and Easy Street
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There have been some misleading media reports which have mistakenly stated that because credit unions are small relative to banks, we are therefore outside of the Australian banking system and regulatory framework. This could not be further from the truth. In many instances credit unions hold higher prudential positions than the banks because of our simple and conservative business models.
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Credit ratings are not a guarantee of business performance
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Another common misconception is that credit ratings provided by international ratings agencies for wholesale investments are a safe guide to where you should place your retail deposits. This is not true – the focus on credit ratings is based on the capacity to repay creditors or maintain future earnings for dividend distributions and share price estimates and NOT the safety of retail deposits which in an ADI, have first priority.
Also, as a mutual, we don’t have shareholders so we have no competing interest groups. We only exist to serve Members and rely predominantly on retained (prior period) earnings to fund our future growth.
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Our Member Guarantee
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As a mutual whose mission it is to help Members achieve their financial goals, our focus remains on our Member's best interests and that is why we are conservative and careful managers of our Member’s money.
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