The Reserve Bank of New Zealand – Te Pūtea Matua is inviting feedback on the draft legislation for the proposed Deposit Takers Act.
The new Deposit Takers Act will create a single regulatory regime for all bank and non-bank deposit takers (NBDTs), such as building societies, credit unions and retail-funded finance companies). It will also introduce a new Depositor Compensation Scheme that will protect up to $100,000 per depositor, per licensed deposit taker, if a payout event is triggered.
Reserve Bank Governor Adrian Orr said this is a significant step towards strengthening the regulatory framework for all institutions that take deposits, and he encourages all stakeholders to share their views on the proposals.
“The new Act will broaden and clarify the scope of our role, which has evolved significantly since the Reserve Bank began prudentially regulating banks more than 30 years ago.”
The new legislation will require the RBNZ to:
- establish deposit insurance (to be known as the Depositor Compensation Scheme) that will apply to all institutions that take eligible deposits;
- introduce a single regulatory regime for NBDTs and banks, with standards as the main tool for us to set requirements;
- strengthen director accountability with penalties for non-compliance;
- broaden our supervision and enforcement tools (including a new power to conduct on-site inspections); and
- strengthen and clarify the crisis resolution framework.
After the Act comes into force, there is likely to be a transition period to allow both the Reserve Bank and regulated entities time to prepare and adapt to the new regime.
We have worked closely with the Treasury and the Parliamentary Counsel Office to develop this draft legislation on the Minister of Finance’s behalf.
Consultation on the exposure draft is open until 21 February 2022. During this period, we will be actively engaging stakeholders through a series of workshops and information sharing sessions.
The Depositor Compensation Scheme is being prioritised ahead of the rest of the Act coming into effect and is expected to be up and running in late 2023, around six months after the Deposit Takers Act is enacted.