tmmonline.nz  |   landlords.co.nz        About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds

NZ's Financial Adviser News Centre

GR Logo
Last Article Uploaded: Friday, November 1st, 10:39AM

Investments

rss
Investment News

New rules for non-deposit takers

New details of long running finance sector reforms have been unveiled including guarantees for depositors and universal oversight of all institutions taking deposits from the public.

Monday, December 6th 2021, 7:15PM

by Eric Frykberg

The guarantee will cover losses of up to $100,000 for each depositor.

There will also be a single regulatory regime for both bank and non-bank deposit takers.

This was announced in principle in April following a process of reform that started in 2017.

But the RBNZ has now unveiled draft legislation to make it happen, and is inviting feedback.

The new Deposit Takers Act will provide common oversight for both banks and non-bank deposit takers such as building societies, credit unions and retail-funded finance companies.

The Depositor Compensation Scheme will be prioritised ahead of the Deposit Takers Act and is hoped to be in force by 2023.

It will be funded by banks and non bank deposit takers themselves, but the cost will inevitably be passed on to the customer.

The $100,000 limit is a retreat from an earlier idea of far greater compensation for short term high level deposits.

This would cover instances where a person sold a house and a bank failure happened before the new house was paid for.

The proposed law makes allowances for these higher payments to be permitted, but does not expect them to be in place when the main bill becomes law.

The Reserve Bank Governor Adrian Orr said the scheme is a significant step towards strengthening 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 Reserve Bank began prudentially regulating banks more than 30 years ago.”

The proposed bill includes substantial criminal penalties for non compliance, with fines ranging up to $5million.

« Earnings surprises support equity returnsClassic hits of 2021 revisited (plus all the new releases) »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment

 

print

Printable version  

print

Email to a friend

Good Returns Investment Centre is brought to you by:

Subscribe Now

Keep up to date with the latest investment news
Subscribe to our newsletter today

Edison Investment Research
  • October_terminations_(1).pdf">Termination of coverage - Henderson Eurotrust
    31 October 2024
    Termination of coverage
    Edison Investment Research is terminating coverage on Henderson Eurotrust (HNE). Please note you should no longer rely on any previous research or estimates...
  • Baker Steel Resources Trust
    30 October 2024
    Key takeaways from the Cemos site visit
    We recently visited the Tarfaya cement grinding line of Cemos Group, one of the two largest holdings of Baker Steel Resources Trust (BSRT), which made...
  • Canadian General Investments
    30 October 2024
    Potential for Canadian outperformance
    Canadian General Investments (CGI) is managed by Greg Eckel at Morgan Meighen & Associates (MMA). He believes that investors could be rewarded by an allocation...
© 2024 Edison Investment Research.

View more research papers »

Today's Best Bank Rates
Rabobank 5.25  
Based on a $50,000 deposit
More Rates »
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox  |  Disclaimer
 
Site by Web Developer and eyelovedesign.com