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Depositor Compensation Scheme Development of Regulations

We asked for feedback on the development of regulations for the Depositor Compensation Scheme under the Deposit Takers Act.


Summary of submissions and next steps

This consultation closed on 25 September 2023.

We received 23 submissions, published in the document below, along with a summary of submissions.

Submissions on Levy Framework - updated 16 April 2024 (PDF 16.3 MB)

Summary of Submissions (PDF 449 KB)

Please note that some submissions also discuss the Statement of Funding Approach and Proportionality Framework. 

About the consultation

The Deposit Takers Act (DTA) modernises New Zealand’s regulatory framework to help ensure financial stability and the safety and soundness of deposit takers.

The legislation also introduces a new Depositor Compensation Scheme (DCS) so depositors can have confidence their deposits, in the event of a deposit taker failure, are eligible for compensation up to $100,000 per depositor, per institution. The DCS will be funded by an industry levy set by the Minister of Finance and will be prioritised ahead of the rest of the legislation coming into effect, with the DCS intended to commence from mid-2025. We undertook this consultation to support the introduction of the DCS.

Find out more about the DTA and how the DCS protects depositors

What we asked for feedback on

We asked for feedback on 2 key issues to support the introduction of the DCS:

  • Statement of Funding Approach
  • Levy Framework

Statement of Funding Approach

Treasury led the Statement of Funding Approach (SoFA) consultation.

Read the SoFA consultation document, submissions and a Summary of Submissions on the Treasury website

The DTA requires the Minister of Finance to publish a SoFA for the DCS at least every 5 years. The SoFA is the funding strategy for the DCS, and will set out its:

  • estimated costs
  • a target size for the DCS fund (if any)
  • the timeframe to reach this target
  • requirements for the investment of the fund, and
  • a proposed approach to managing the Crown’s financial position on the DCS.

Levy Framework

The Reserve Bank is leading the Levy Framework consultation. The Levy Framework consultation paper asked for feedback on approaches to setting the deposit taker levy to build up the DCS fund over time in line with the SoFA. Such approaches include risk-based levies or flat-rate levies applied to protected deposit amounts. We also asked for feedback on determining a proxy for protected deposit amounts in the early years of the DCS.

Moneybox and money bag icon

Why we asked for feedback 

This consultation feedback will help to ensure a robust funding approach and Levy Framework is in place to ensure the DCS can meet the commitment to protect depositors. This will contribute to a well-functioning, resilient, and efficient financial system by increasing public confidence in the financial system and preventing depositors from facing hardship in the unlikely event their deposit taker fails.

Working with the Treasury

The Reserve Bank and Treasury have worked closely together on this consultation. As the DCS funding approach and Levy Framework are related matters, in some cases, the Treasury and Reserve Bank have shared submissions from each consultation.  

Consultation materials

Read the SoFA consultation paper on the Treasury website

Levy Framework consultation paper (PDF, 745KB)