The bill seeks to create a single regulatory regime for all non-bank deposit takers and banks
Parliament has announced that its finance and expenditure committee is seeking feedback from the public regarding a proposed legislation aimed at strengthening the regulation and supervision of the deposit-taking sector.
The Deposit Takers Bill is intended to help protect society from the damage to New Zealand’s financial system and wider economy caused by unexpected external factors, excessive risk taking by the deposit-taking sector, and unmanaged failures of individual deposit takers. The bill was introduced last September and is currently going through a select committee process.
In particular, the bill merges the currently separate frameworks for registered banks and licensed non-bank deposit takers, such as such as building societies, credit unions, and finance companies, under a single regulatory regime.
Moreover, the Bill introduces the “depositor compensation scheme” (DCS) − a fund that will provide an eligible depositor up to $100,000 for their covered deposits in New Zealand dollars at each deposit-taking institution. The DCS can also compensate creditors or shareholders that may be made worse off as a result of a resolution action relative to outcomes under liquidation.
Once it becomes a law, the bill will replace the Banking (Prudential Supervision) Act 1989 and the Non-bank Deposit Takers Act 2013.
The Parliament confirmed that the select committee will receive submissions through the New Zealand Parliament website until 10 November.
Source: thelawyermag.com
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