A plan to charge a fee on deposits over $1 million at banks, credit unions and building societies is unlikely to have any effect on the insurance industry.

The Federal Government last week signalled it is considering the threshold, but financial sector executives have expressed concern the threshold could promote the flow of cash out of funds and trusts not covered by the guarantee.

NIBA regulatory consultant John Hanks told insuranceNEWS.com.au the nature of general insurance guarantee arrangements is significantly different to those in the financial system, banks and other APRA-regulated bodies.

“The issues that are affecting banks and other deposit takers aren’t relevant to the general insurance policyholder protection scheme,” he said.