RBNZ seeks input on new Deposit Takers Act
The Reserve Bank of New Zealand (RBNZ) is asking for feedback on the draft legislation for the proposed Deposit Takers Act that creates a single regulatory regime for all bank and non-bank deposit takers, such as building societies, credit unions and retail-funded finance companies.
The proposed legislation will require the RBNZ to establish deposit insurance – to be known as the Depositor Compensation Scheme. It will apply to all institutions that take eligible deposits and will protect up to NZ$100,000 per depositor, per licensed deposit taker, if a payout event is triggered.
RBNZ Governor Adrian Orr says the new Act will help strengthen the regulatory framework for all institutions that take deposits.
“The new Act will broaden and clarify the scope of our role, which has evolved significantly since the RBNZ began prudentially regulating banks more than 30 years ago,” he says.
Standards will be the main tool used by the RBNZ to set requirements. The Act will also strengthen director accountability with penalties for non-compliance.
The new legislation will also broaden the RBNZ’s supervision and enforcement tools and will include a new power to conduct on-site inspections. It is also expected to 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 RBNZ and regulated entities time to prepare and adapt to the new regime.
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.
Consultation on the exposure draft is open until 21 February 2022. During this period, the RBNZ will actively engage stakeholders through workshops and information sharing sessions.