Proposed Deposit Takers Act
Consultation on exposure draft Bill completed
In December 2021 we released an exposure draft of the Deposit Takers Bill for public consultation. The exposure draft is a preview of the Bill and we asked for stakeholder feedback before it is introduced to Parliament. The consultation closed on 21 February 2022.
We prepared a commentary document for the exposure draft to help stakeholders interpret and navigate the draft Bill. The commentary provides a high level summary of the exposure draft and draws readers’ attention to some questions we wanted to hear industry’s views on, for example, about the implementation of the Depositor Compensation Scheme.
We are now carefully considering the feedback from stakeholders received on the exposure draft and will seek further Cabinet decisions to revise the relevant provisions of the Bill as appropriate. We will publish the summary of submissions and the submissions we received before the Bill is introduced into Parliament.
The Bill is expected to be introduced into Parliament in July/August 2022, and come into force as law after receiving Royal Assent in mid-2023. After the Act comes into force, there will be a transition period to allow both the Reserve Bank and regulated entities time to adapt to the new regime. A significant work programme over several years will be required to implement the new prudential framework for deposit takers. The Depositor Compensation Scheme provisions of the Act are targeted for initial implementation in early 2024, ahead of the rest of the Act coming into effect.
Further public consultation is expected on the funding framework which includes industry levies, before the Depositor Compensation Scheme is implemented.
An indicative timeline is shown below.
What the new Act will do
The new Deposit Takers Act will create a single regulatory regime for all bank and non-bank deposit takers (such as building societies and finance companies). It will also introduce a new Depositor Compensation Scheme that will protect up to $100,000 per depositor, per licensed deposit taker, if a payout event is triggered.
The new legislation will require us to:
- establish a Depositor Compensation Scheme that will apply to all institutions that take deposits, based on a clear definition of eligible depositor and protected deposits
- introduce a single regulatory regime for non-bank deposit takers (NBDTs) and banks, with standards (a secondary legislative instrument) as the main tool for us to set requirements
- strengthen the accountability for directors of their deposit takers, with penalties for non-compliance
- broaden our supervision and enforcement tools (including a new power to conduct on-site inspections)
- strengthen and clarify the crisis resolution framework.
Depositor Takers Act Timeline
2018 RBNZ Act Review begins
2019 Phase 2 of RBNZ Act Review
Phase 2 provisions split into proposed Deposit Takers Act
2020 Public Consultation
2021 Policy Development
Policy finalised, Cabinet makes in principle decisions
Bill drafting begins
Exposure draft for the Bill released for consultation
2022 Deposit Takers Bill
Bill introduced, First reading
Parliamentary process (Select committee/Second reading/Committee of whole House/Third reading)
2023 Deposit Takers Act
Royal Assent – Bill becomes Deposit Takers Act (depending on progress through Parliament)
Previous contents related to the DTA development
A joint Review team (Reserve Bank and Treasury) worked on the DTA until May 2021. More recently the project has been run out of the Reserve Bank, but with Treasury and independent experts on the projects steering committee.
We have also proactively released the Cabinet paper (containing decisions made after April 2021), a supplemental Regulatory Impact Statement, Cabinet minutes, and two joint reports to the Minister of Finance relating to the exposure draft of the Bill.
- Cabinet paper: Reserve Bank Act Review – Deposit Takers Bill (PDF 175KB)
- Regulatory Impact Statement: Deposit Takers Bill (Supplementary decisions) (PDF 977KB)
- Minutes of Decision: Cabinet Economic Development Committee DEV-21-MIN-0204 (PDF 125KB)
- Minute of Decision: Cabinet CAB-21-MIN-0429(PDF 123KB)
- Joint report to the Minister of Finance: Cabinet Paper and Technical Decisions Related to the Deposit Takers Bill RBNZ #5853 (PDF 840KB)
- Joint report to the Minister of Finance: Technical Decisions Related to the Deposit Takers Bill RBNZ #5888 (PDF 8MB)