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Industry workshops

Read a summary of the key themes from our Deposit Takers Act (DTA) industry workshops held in August 2023.

About the workshops

We hosted our first industry workshops along with The Treasury, discussing the implementation of the new DTA following its enactment in July.

Read our DTA Industry Workshop Slides - August 2023 (PDF, 2.43MB)

The Treasury's workshop slides are available on the Treasury website.

Below is a summary of the key themes.

Key themes

We heard we need to communicate how the DTA’s purposes and principles work together. There was a concern that aspects such as competition and access to diverse products and services may not be sufficiently weighted. 

The DTA provides the blueprint for licensing, regulation, supervision and enforcement of deposit takers. The DTA’s primary purpose is financial stability, with additional purposes including:

  • promoting the safety and soundness of each deposit taker 
  • supporting New Zealanders having reasonable access to financial products and services. 

To achieve the purposes of the DTA, we must take into account a range of principles when performing our functions. For example: 

  • the need to avoid unnecessary compliance costs
  • to maintain competition
  • the desire for the deposit taking sector to comprise of a diversity of institutions who provide products and services to a diverse range of New Zealanders.

View the Deposit Takers Act 

We heard that you wanted to see how we will apply the proportionality framework in practice, particularly regarding the capital standard.

We expect to publish the first proportionality framework by early April 2024. We will take all reasonable steps to make sure it is published by then. The framework sets out how the Reserve Bank considers the proportionality principle when developing standards and must be kept up-to-date. We will review the framework, in whole or in part, as needed. Before publishing an updated framework, we must consult affected persons (or their representatives).

Find out more about the proportionality framework and give us your feedback

Workshop attendees wanted to know how we established groups against the proportionality framework.

Creating thresholds requires an element of judgement. Our proposed thresholds are placed at ‘natural breakpoints’ after ranking all deposit takers based on total assets. The distinct gap helps to prevent frequent transitions from one group to another.

Some NBDTs said they could provide accurate customer numbers and underlying customer account values (meaning, very close to a Single Customer View or SCV). Therefore, could they provide this information instead of having a proxy applied in calculating their levy?

We need to calculate the protected deposit amounts (called ‘the DCS levy base’) on a customer-based approach by aggregating deposits a depositor holds with a deposit taker. When we finalise the SCV standards in late 2026, it will set detailed requirements on how SCV should be prepared and shared with us. We expect that the SCV standard will be fully complied by 2028. We will give sufficient time (late 2026 to 2028) for all deposit takers to comply with the SCV requirements by 2028.

A proxy for protected deposit amounts will apply from DCS go-live in late 2024. We will consider industry feedback on whether to provide deposit takers with options of using the proxy or the exact SCV data for levy purposes during the period when the SCV standards are finalised but have yet to be fully complied across the industry. We heard from some firms that they would like to provide better estimates earlier.

We were questioned about our ‘runway’ and short timeframes for deposit takers to have data available and set up systems.

We are considering the customer data requirements for the DCS. We will continue collaborating with deposit takers on this. Should a deposit taker failure occur in the transitional period, we may need data about customers’ accounts and balances to make sure the right compensation can be paid to the right customers promptly. We will discuss what data we expect from deposit takers in this transitional period in bilateral or group sessions. Following these discussions, we will determine whether requirements and/or objectives are met by late 2024.

We will be engaging with deposit takers about their plans to transition to SCV by 2028. We heard at the workshops that SCV may be difficult for some deposit takers to deliver and may require system upgrades.

Workshop attendees asked whether there will be a transition period for NBDTs to meet the standards after receiving a licence and whether we will set up a team to manage this process.

We propose that by July 2028, all deposit takers wanting to continue business in New Zealand must complete a licensing process to demonstrate that they qualify for a licence under the new DTA. Our licensing team will implement a licensing process. We are in the early stages of our work and will work with the industry as we collectively implement the new regime.

The licensing timeframe may seem a long way out, but existing deposit takers should start thinking now about the implications of the DTA for their business. Between now and December 2027, we will prepare and issue standards, which will be the secondary legislation explaining the criteria deposit takers must meet, including for licensing. Licence applications must be submitted, assessed and a licensing decision issued in the 18-month licensing window from January 2027 to July 2028. We suggest that deposit takers be ready to submit a sound licensing application in January 2027 to mitigate the risk of falling short on any of the licensing criteria and needing more time to address the gaps.

Between now and January 2027, there is an opportunity for deposit takers to:

  • plan what the DTA means for their business
  • use the consultation process to assess draft material
  • address any gaps in compliance, and
  • prepare a licence application.

It will likely be an iterative process as we amend drafts of standards during consultation. This period also allows time for deposit takers not wanting to continue under the DTA to plan an orderly exit.

Industry raised questions on how Open Bank Resolution (OBR) will interact with DCS under the DTA. We are currently engaging the 10 OBR-prepositioned banks on a potential solution. We plan to publish our proposals when we consult on OBR prepositioning standards (or equivalent) in 2024.

More information