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Depositor Compensation Scheme

The Deposit Takers Act will establish a new Depositor Compensation Scheme to protect up to $100,000 per depositor per deposit taker in the event of a failure.

Deposit Takers Act overview

The Deposit Takers Act 2023 (the Act) strengthens our ability to supervise Aotearoa New Zealand’s financial system and act more quickly if a deposit taker is in trouble. Deposit takers are banks, credit unions, building societies and finance companies.

The new legislation is based on the International Monetary Fund’s recommendations and will bring New Zealand into line with other OECD countries and international best practice. It’s about giving New Zealanders the confidence that their savings are protected.

Depositor Compensation Scheme

To deliver our obligations under the Act, from mid-2025, we will be introducing a Depositor Compensation Scheme (DCS) to protect up to $100,000 per depositor (customer) per deposit taker (financial institution) in the event of a failure.

Man at the till in a deli

Protecting New Zealanders' savings

The DCS will give New Zealanders confidence that their eligible savings are protected if their deposit taker fails.

Deposit takers will need to be licensed to operate and comply with new standards to have products protected under the DCS. The products likely to be protected include savings accounts, transactional accounts, term deposits and equivalent accounts.

Couple meeting with a banking representative

When will my savings be protected from?

The DCS is being prioritised ahead of the rest of the Act coming into effect. It is expected to be operational from mid-2025, so that New Zealanders can have confidence that their funds are protected as soon as possible.

Before the DCS comes into effect, we will provide deposit takers with guidance and resources to communicate the DCS to their customers. There will also be information on our website.

Woman shaking hands

Developing the DCS's rules with the deposit-taking sector

We are currently developing regulations and standards that deposit takers will need to comply with under the DTA. The deposit-taking sector is being consulted and engaged with throughout this process and they are providing valuable input into how DCS will work in practice.