Public disclosure of bank breaches
Status: We have implemented the new approach with effect from 1 January 2021.
24 March 2021
In December 2020, the Reserve Bank issued notices to all banks under section 93 of the Reserve Bank of New Zealand Act 1989, requiring them to report breaches of regulatory requirements privately to the Reserve Bank with effect from 1 January 2021. The details of the reporting requirements are contained in the section 93 notices and associated guidance:
- Example of the section 93 notices issued to banks (PDF 780KB)
- Guidance document providing further explanation and process arrangements for the section 93 obligation (PDF 781KB)
Material breaches of key bank prudential requirements will list any material breaches by registered banks.
The Reserve Bank has had the following Amendment Orders made, to revise the requirements for banks’ published disclosure statements. The amendments introduce a materiality threshold to the disclosure of breaches of conditions of registration, starting from disclosure statements with a balance date of 31 March 2021:
- Registered Bank Disclosure Statements (New Zealand Incorporated Registered Banks) Order 2014 Amendment Order 2021
- Registered Bank Disclosure Statements (Overseas Incorporated Registered Banks) Order 2014 Amendment Order 2021
The Reserve Bank makes working copies of the disclosure Orders in Council available on its website, reflecting all amendments made to the principal orders. New versions of the working copies of the Orders, incorporating these latest amendments, are available.
- Registered Bank Disclosure Statements (New Zealand Incorporated Registered Banks) Order 2014 (as amended) (PDF 1.12MB)
- Registered Bank Disclosure Statements (Overseas Incorporated Registered Banks) Order 2014 (as amended) (PDF 865KB)
20 November 2020
The Reserve Bank discussed with banks during Q4 2019 the detailed wording for the new formal requirement to report breaches, and associated guidance on the materiality threshold. As this work was delayed by other priorities, the planned start date was postponed until 1 April 2020. The date for the policy to take effect was then further delayed for at least six months in light of the COVID-19 outbreak. (See Regulatory relief to provide headroom for customer-focus and risk management.)
The policy is currently planned to take effect from 1 January 2021.
Early in December, the Reserve Bank will issue notices under section 93 of the Reserve Bank of New Zealand Act 1989 to all registered banks to require them to report breaches from 1 January 2021. During Q1 the Reserve Bank will work to have changes made to the bank disclosure Orders in Council, so that for disclosure statements with reporting dates from 31 March 2021 onwards, banks will only have to disclose material breaches.
- Example of the section 93 notice (PDF 624KB)
- Guidance document providing further explanation and process arrangements for the section 93 obligation (PDF 778KB)
The Reserve Bank welcomes any comments, by Friday, 11 December 2020, on the following drafts of the amending orders needed to revise the disclosure Orders in Council.
- Draft amending order for New Zealand-incorporated registered bank disclosures (PDF 415KB)
- Draft amending order for overseas-incorporated registered bank disclosures (PDF 412KB)
23 September 2019
The Reserve Bank has published a summary of submissions and final policy decisions on the reporting and publishing of breaches by banks.
The decision follows a public consultation on the matter late last year, and ongoing discussion with stakeholders on a new framework for the reporting of banks’ breaches.
The new policy will require a bank to report promptly to the Reserve Bank when there is a breach or possible breach of a requirement in a material manner, and report all minor breaches every six months. Only actual material breaches will then be published on the Reserve Bank’s website.
Following further discussion with banks on implementation details the policy is planned to take effect from 1 January 2020.
20 May 2019
Submissions on the consultation document “Public and private reporting by banks of breaches of regulatory requirements, with consideration of materiality” closed on 14 December 2018. The following three submissions were received:
The Bank is currently assessing the consultation feedback and finalising its policy decisions (which will be published in the third quarter of 2019). Any new requirements are likely to apply from 1 October 2019 or 1 January 2020.
23 October 2018
The Reserve Bank has published a consultation paper proposing changes to the reporting and publishing of regulatory breaches by banks.
One of the conclusions of the Regulatory Stocktake, and the follow-on development of the Bank Financial Strength Dashboard, was that banks should be formally required to notify the Reserve Bank of any breaches of their conditions of registration, and that the Reserve Bank should draw on that reporting to publish collated information on bank breaches on a dedicated new page on its website.
The consultation paper seeks views on the proposed mechanism for putting that conclusion into effect.
The paper also seeks views on the option of applying a materiality threshold to the publication of breaches.
Under that option, the Reserve Bank would assess whether or not a breach that has been reported to it is material, and only material breaches would be published on the website. The paper discusses the criteria that could be applied for testing materiality.
If the consultation concludes that having a materiality threshold is the preferred option, changes would also need to be made to the Orders in Council that set out the requirements for banks’ disclosure statements.
The consultation closed at 5.00 pm on 14 December 2018.