Depositors compensation scheme to be established.
Parliament passed the Deposit Takers Act into law in July 2023. The Act will establish a new compensation scheme to protect deposits of up to $100,000 in each bank or other deposit taker. We expect the scheme to go live from late 2024.
What it means for you.
- Nothing is changing right now.
- The Act will create a Depositor Compensation Scheme to compensate each individual, company or trust up to $100,000 of the money they have deposited per bank, building society, credit union or other deposit taker in the event that that institution fails.
- The scheme will be financed by levies on deposit takers, backed by the Government.
- We expect the scheme to start operating from late 2024.
The new scheme better aligns New Zealand with deposit protection available in other OECD countries.
The Act is the final piece of legislation from a review of the Reserve Bank started in 2017. As well as the compensation scheme, it will also bring in licensing, standards, and Reserve Bank checks for banks and other deposit takers to make sure they are stable and protect customers.
New Zealand banks are among the best capitalised banks in the world and carry substantial asset buffers against market disruption. These buffers are higher than the ones in place before the Global Financial Crisis, despite New Zealand banks not suffering any material losses during the financial crisis.
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