Statement of Funding Approach - Funding Strategy for the Depositor Compensation Scheme

Funding strategy for Depositor Compensation Scheme#

Te Tai Ōhanga – The Treasury has opened the first stage of public consultation on the funding strategy for the Depositor Compensation Scheme (DCS), that will be established by the Deposit Takers Act 2023. This consultation runs from 31 July to 25 September 2023.

The consultation document is available here: 

Purpose of this consultation#

The Deposit Takers Act requires the Minister of Finance to publish a Statement of Funding Approach (SoFA) for the DCS at least every five years. This first consultation focusses on the approach to building the DCS fund, the estimated costs of the fund, determining a target size of the DCS fund (if any), and a timeframe for reaching any target.

The Treasury will use submissions to help inform the creation of a draft SoFA, then seek feedback on the draft and operational aspects of the SoFA in a second round of public consultation in early 2024.

Questions about the consultation process can be sent to [email protected]

How to make a submission#

This template is a useful guide for preparing a written submission: 

Written submissions can be sent to the Treasury in the following ways:

  • As an email attachment sent to [email protected]
  • By post addressed to Financial Markets, The Treasury, PO Box 3724, Wellington 6140

Te Pūtea Matua – Reserve Bank of New Zealand is also consulting on the levy framework for the DCS from 31 July to 25 September (see the Reserve Bank website). As the funding strategy and levy framework for the DCS are related matters, the Treasury and Reserve Bank will share submissions from each consultation. A single submission on both the Treasury’s statement of funding consultation paper and the Reserve Bank’s levy framework consultation paper can be provided to either agency if submitters prefer.


The DCS is expected to be in place in late 2024. It will compensate up to $100,000 for each depositor per licensed deposit taker in the event a deposit taker fails. The DCS aims to contribute towards protecting and promoting the stability of New Zealand’s financial system by protecting depositors and allowing the DCS fund to be used in the unlikely event of a deposit taker failure. A robust funding framework is needed ahead of the DCS being implemented, to ensure the DCS can meet its commitments.

The Deposit Takers Act 2023 that will establish the DCS is the second phase of reform of the Reserve Bank of New Zealand Act 1989. The first phase was the passage of the Reserve Bank of New Zealand Act 2021. This legislation modernises the institutional arrangements of the Reserve Bank, provides a clearer financial policy mandate for the Reserve Bank focussed on promoting financial stability, and requires the Minister of Finance (the Minister) to issue a Financial Policy Remit to the Reserve Bank.