Regulatory Alerts2023-11-29
Overview of the Deposit Takers Act
The Reserve Bank of New Zealand issued the Deposit Takers Act 2023, which received Royal Assent on 6 July 2023 to replace previous banking legislation. The Act establishes a single regulatory regime for all deposit takers, introduces a Depositor Compensation Scheme guaranteeing up to $100,000 per depositor, and strengthens the Reserve Bank's supervision and enforcement powers. Implementation involves a work programme to develop regulatory requirements and a licensing process while retaining specific parts of prior Acts until full adoption.
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Deposit Takers Act
The Deposit Takers Act 2023 received Royal Assent on 6 July 2023. The Act is the final piece of legislation from a review of the Reserve Bank started in 2017.
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Deposit Takers Act becomes law
The Deposit Takers Act 2023 (the Act) received Royal Assent on 6 July 2023. This follows the Finance and Expenditure Committee's consideration of the Bill.
The Deposit Takers Act 2023 replaces the following Acts:
Banking (Prudential Supervision) Act 1989
Non-bank Deposit Takers Act 2013
About the Act
The Deposit Takers Act modernises our regulatory framework to help ensure the safety and soundness of deposit takers. This is in line with our mandate to promote the prosperity and wellbeing of New Zealanders.
Single regulatory regime
The Act provides a single, coherent regulatory regime to enable robust regulation of all deposit takers.
Additional powers and an improved framework
The Act provides for new inspection powers and the framework for managing and resolving a deposit taker in financial distress.
Depositor Compensation Scheme
The Act introduces a new Depositor Compensation Scheme (DCS) so depositors can have confidence that their deposits, in the event of a deposit taker failure, are eligible for compensation up to $100,000 per depositor, per institution.
Strengthening the RBNZ’s powers
The strengthening of our supervision and enforcement powers allows us to act to minimise the risks of high-impact failures.
What the Act does
Provides additional powers, including new requirements for directors, more inspection powers and an improved penalty framework.
Creates a single regulatory regime for all entities who hold deposits — for example, banks and credit unions, to enable robust monitoring of all deposit takers to ensure consumers are protected.
Provides the framework for managing and resolving any deposit taker in financial distress.
Introducing the new measures
A substantial work programme is underway to implement the new prudential framework for deposit takers.
We have begun developing and consulting on the regulatory requirements and will introduce a licensing process for deposit takers to operate under the regime. Parts of the current Banking (Prudential Supervision) Act 1989 relating to the regulation and supervision of registered banks and the Non-bank Deposit Takers Act 2013 will remain in force until the remaining parts of the DTA have been fully implemented.