Use of the word "bank"
Part 4 of the Reserve Bank of New Zealand Act 1989 (the Act) deals with use of the words "bank", "banker" and "banking" (referred to as "restricted words"), as well as use of these words as part of any other word, and translations into another language.
Under section 64 of the Act, only the following persons may use a name or title that includes a restricted word:
- the Reserve Bank;
- registered banks; and
- any person authorised by the Reserve Bank to use a name or title that includes a restricted word.
The restriction also does not apply to a person using a name that includes a restricted word if the restricted word signifies a geographic place name, or the name of a natural person, and the name is not used in respect of a financial institution.
The Reserve Bank has issued a number of documents relating to the use of restricted words by overseas banks that are not registered as banks in New Zealand. Specifically:
- Guidance note for overseas banks on limitations on the use of restricted words (PDF 64KB) (This sets out how the Reserve Bank will assess whether an overseas bank is carrying on an activity in New Zealand, and therefore covered by the restrictions on the use of restricted words in Part 4 of the Reserve Bank of New Zealand Act 1989);
- Guidance note on the Reserve Bank’s approach to section 65 authorisations for overseas banks (PDF 384KB) (This sets out how the Reserve Bank will assess when to authorise an unregistered overseas bank, or class of unregistered overseas bank, to use restricted words while carrying on an activity in New Zealand); and
- Reserve Bank of New Zealand Act (Overseas Banks) Class Authorisation Notice 2019 (Subject to conditions, this permits unregistered overseas banks to use restricted words when carrying on certain prescribed forms of wholesale business in New Zealand).
- Reserve Bank of New Zealand Act (Overseas Banks) Class Authorisation Amendment Notice 2020 (This extends the Reserve Bank of New Zealand Act (Overseas Banks) Class Authorisation Notice 2019 to 22 September 2024).
- Reserve Bank of New Zealand Act (Overseas Banks) Class Authorisation Amendment Notice 2021 (This amends clause 13(c) of the Reserve Bank of New Zealand Act (Overseas Banks) Class Authorisation Notice 2019, related to the conditions placed on overseas banks when using a restricted word, to remove the use of section 36 of the Reserve Bank of New Zealand Act 1989 to gather information. Instead, the gathering of information relies on the primary authorisation.)
‘Holding out' as a registered bank
Section 72 of the Act creates an offence for a person who is not a registered bank to hold itself out to be a registered bank by using any name, title, trade mark, style, designation, or description that represents or implies that the person is a registered bank.
Non-banks should also be aware of section 9 of the Fair Trading Act 1986, which prohibits, in trade, engaging in conduct that is misleading or deceptive, or is likely to mislead or deceive. The Commerce Commission website provides more information about the Fair Trading Act 1986.
Use of restricted words in advertisements
Section 66B of the Act places a limit on the use of restricted words in advertisements by financial institutions that are not banks. If a financial institution that is not a registered bank wishes to use a restricted word in an advertisement, the advertisement must contain a statement that:
(1) states it is not a registered bank; and
(2) is communicated in a manner that ensures, as far as is reasonably practicable, that the statement attracts the attention of the person to whom the advertisement is directed.
What is an "advertisement"?
The meaning of "advertisement" under section 66B is wider than the ordinary meaning of that word. Section 66B defines advertisement as any thing used to promote the interests, or the services or products, of a non-bank financial institution. "Advertisement" includes a trademark of a non-bank financial institution, but does not include its name or title.
The definition of "advertisement" includes things that may not ordinarily be thought of as advertisements, including anything intended by a non-bank financial institution to motivate customers to use the services or products of the institution, or to increase the goodwill of the institution. Almost anything that uses or carries the restricted words could be an "advertisement" if the restricted words are used with the intention to promote the interests, services or products of a non-bank financial institution.
Things such as signage, promotional items, and sponsorship material are all covered by the term "advertisement". Other things that could carry "advertisements" include:
- any object;
- any building or structure; and
- any material sponsoring an event or entity.
Section 66B applies to advertisements in any media type. However, in the case of a printed advertisement, the advertisement is more likely to comply if a disclaimer statement is:
- placed in isolation from other text;
- placed in a prominent place in the advertisement;
- of a font size that is appropriate in relation to other font sizes used in the advertisement; and
- a colour that distinguishes the statement from other content.