Deposit Takers Bill

Prudential regulation and supervision of deposit takers and the introduction of deposit insurance

A new framework for the prudential regulation and supervision of deposit takers and the introduction of deposit insurance is being progressed by a proposed Deposit Takers Bill. The statutory purposes in this Bill will be tied to the new financial policy objective contained in the Reserve Bank of New Zealand Bill – protecting and promoting the stability of New Zealand’s financial system.

Work on the measures to promote financial stability and protect deposits held in both bank and non-bank deposit takers was extended when consultation was effectively paused by the need to respond to COVID-19. Consultation was then extended by six months to October 2020 and the Minister of Finance announced new Deposit Taker measures on 22 April 2021.

The proposed new Deposit Takers Bill will create a single regulatory regime for all bank and non-bank deposit takers (such as building societies, credit unions and finance companies). It will also introduce a new deposit insurance scheme that will protect up to $100,000 per depositor, per institution in the event of a failure.

New Zealand is currently only one of two OECD countries that do not currently protect depositors from loss, so this new scheme will significantly strengthen New Zealand’s financial system safety net. The reforms also address a number of the recommendations of the IMF’s 2017 Financial Sector Assessment Programme.

The proposed Bill will enable the Reserve Bank to:

• Establish the depositor protection scheme, which will apply to all institutions that take deposits;
• Introduce a single regulatory regime for non-bank deposit takers and banks, with standards as the primary tool for setting requirements;
• Strengthen the accountability of board directors who oversee deposit takers with penalties for non-compliance;
• Broaden the Reserve Bank’s supervision and enforcement tools (including a new power to conduct on-site inspections);
• Strengthen and clarify the crisis resolution framework.

It is anticipated that this Bill will be introduced to Parliament mid-2022. Measures to enact deposit insurance will be prioritised in order to have the scheme up and running in 2023.

Since May 2021, the Reserve Bank has led final policy work and drafting, supported by the Treasury. An exposure draft of the Bill was released in December 2021. 

Progress on the Bill (once introduced) can be followed at the New Zealand Parliament website Bills (proposed laws) page. Progress on implementation can be found at the Reserve Bank of New Zealand website.

Related web pages

Key documents featuring substantive policy decisions

Proactively released information, speeches, media releases, and announcements are all available at the Treasury Reserve Bank Act Review proactive releases, speeches and announcements page.