The Reserve Bank of New Zealand is calling for feedback on the draft legislation for the proposed Deposit Takers Act, which will create a single regulatory regime for all banks plus non-bank deposit takers such as building societies, credit unions and retail-funded finance companies. 

The legislation will also create a new depositor compensation scheme, to be administered by the RBNZ. The scheme will protect up to NZ$100,000 per depositor, per licensed deposit taker, if a payout event is triggered. 

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. However, the 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.

The new regulatory regime will increase the pressure on financial sector directors, with stricter director accountability and penalties for non-compliance. The RBNZ will gain broader supervisory and enforcement tools, including a new power to conduct on-site inspections.

Consultation ends on 21 February 2022 and before then the RBNZ will run a series of workshops and information sessions for stakeholders.