Find out why a single regulatory regime will support a more coherent approach across the banking and non-bank deposit taking (NBDT) sectors.
A single regime supports a more coherent approach across the banking and non-bank deposit-taking (NBDT) sectors so that similar firms and activities are regulated with proportionality, where possible. This aligns New Zealand’s framework with similar models in most other international jurisdictions.
Under the Deposit Takers Act (DTA), prudential regulation and supervision applies to firms that are in the business of borrowing and lending unless they are specifically excluded from the regime. This includes banks, credit unions, building societies, and finance companies.
Wholesale-funded lenders are not expected to be licensed under the new regime, for example, those that solely borrow by raising funds on wholesale capital markets. However, we can collect information and set lending standards for prescribed categories of non-deposit-taking lenders.
The prudential framework can accommodate the full range of deposit takers, from small non-bank deposit takers (NBDTs) to the largest banks. For example, we can calibrate regulatory settings for different classes of deposit takers.
The framework also provides discretion for us to impose institution-specific requirements to reflect the underlying risk profile of the deposit taker (supervisory adjustment).
When exercising its powers under the DTA, we need to take account of certain principles that recognise (among other things) the importance of maintaining competition, preserving diversity in the deposit-taking sector, and the desirability of taking a proportionate approach to regulation and supervision. We must prepare and publish a proportionality framework when developing standards.