“The Deposit Takers Bill modernises our regulatory framework to help ensure the safety and soundness of deposit takers. This is in line with our mandate to promote the prosperity and wellbeing of New Zealanders,” says Reserve Bank Deputy Governor Christian Hawkesby.
Under the legislation, entities who take deposits from individuals and businesses will come under a single, coherent regulatory regime to enable robust regulation of all deposit takers. The legislation also provides for new inspection powers and the framework for managing and resolving a deposit taker in financial distress.
The legislation also introduces a new Depositor Compensation Scheme so depositors can have confidence that their deposits, in the event of a deposit taker failure, are eligible for compensation up to $100,000 per depositor, per institution.
This Scheme 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 Scheme intended to commence by late 2024.
“Passage of this legislation marks a significant milestone for Te Pūtea Matua, in what will be a multi-year programme of work to be the best modern prudential regulator and kaitiaki of New Zealand’s financial system. We look forward to engaging with industry over coming years through the implementation process,” Mr Hawkesby says.
The Banking (Prudential Supervision) Act 1989 and the Non-Bank Deposit Takers Act 2013 are expected to remain in force until the Deposit Takers Act is fully in force – this is currently expected to be around 2028, once standards have been developed and the licensing process has been undertaken.