Latest news with #DepositorCompensationScheme
Scoop
30-06-2025
- Business
- Scoop
Depositor Compensation Scheme Now In Effect
1 July 2025 The Depositor Compensation Scheme (DCS) came into effect today, protecting depositors for up to $100,000 in the unlikely event that their bank or other licensed deposit taker fails. Licensed deposit takers include banks, credit unions, building societies and finance companies who take retail deposits in New Zealand and are supervised by the Reserve Bank of New Zealand. The scheme covers money held in standard banking products, including transaction, savings, notice, and term deposit accounts. It protects individuals, businesses and trusts, and applies automatically from today. The scheme is established under the Deposit Takers Act 2023, and the Reserve Bank will manage and administer the scheme. It is fully funded by levies on industry. Kerry Beaumont, Director of Enforcement and Resolution at the Reserve Bank says, "While deposit taker failures are rare, the DCS gives depositors extra peace of mind that their standard banking products are protected. This type of protection already exists in many other countries and contributes to the stability of New Zealand's financial system.' The scheme does not cover investments like KiwiSaver, bonds, shares, and similar products. It also does not protect against frauds or scams. Banks, credit unions, building societies and finance companies who take retail deposits will list their DCS-protected products on their websites so depositors can check if their accounts are covered. Information about the scheme is also available on the Reserve Bank website.
Scoop
30-06-2025
- Business
- Scoop
Kiwis' Hard-Earned Money Safer
Minister of Finance New rules taking effect today will provide greater protection for Kiwis' money in the unlikely event of a bank collapse, Finance Minister Nicola Willis says. From today, deposits at banks, building societies, credit unions and finance companies are insured up to $100,000 per person, per institution. The change comes from the launch of the Depositor Compensation Scheme (DCS). 'The implementation of this scheme should give New Zealanders extra peace of mind that if something were to go wrong at the institution where they have entrusted their money, they will get their money back. 'It has the additional benefit of promoting better competition by providing smaller deposit takers the ability to compete on a level playing field. 'Sometimes a smaller deposit taker can provide a more competitive deal, but the consumer's confidence is undermined by that organisation's exposure to risk. This scheme helps overcome that issue, promoting better competition, and therefore better deals for Kiwis.' The introduction of the scheme, which is funded by deposit takers and administered by the Reserve Bank, brings New Zealand in line with internation peers, such as Australia and the United Kingdom. Under the DCS, each depositor is protected up to $100,000 per deposit taker. That means that in the unlikely event of a deposit taker collapse, people who have put their money in eligible accounts will get back up to $100,000 per person. The DCS covers money held in standard banking products, including transaction, savings, notice and term deposit accounts. The change is automatic and depositors do not have to do anything to be covered, but it is recommended people check with their deposit taker – be it a bank or something else – to see what is protected by the scheme. Note: For more information on the Depositor Compensation Scheme, including what it covers, and which banks and non-bank deposit takers provide DCS-protected deposits go here.
The Spinoff
25-06-2025
- Politics
- The Spinoff
Echo Chamber: ‘Mr Peters wants to call me a dickhead'
'Dickhead', 'bollocks', 'arrogant wokester loser' – who knows what will come out of Winston Peters next. Echo Chamber is The Spinoff's dispatch from the press gallery, recapping sessions in the House. Columns are written by politics reporter Lyric Waiwiri-Smith and Wellington editor Joel MacManus. It only took a minute for Gerry Brownlee to rise to his feet during Wednesday's question time and threaten to kick someone out of the House. The speaker usually has a short fuse anyway, and the House has been sitting under urgency as the government gets through a slew of bill readings (among them draft legislation that would allow employers to make pay deductions over partial strikes, and another that expands the eligibility for an immigration levy), but perhaps it's the acting prime minister who has made Brownlee feel the need to stay on high alert this week. After all, David Seymour was the one who wanted to bring up the 'flagrant, reckless' whoever whoever when Labour leader Chris Hipkins asked him if he stood by the government actions and whatever whatever. Seymour was lauding the government's recent repeal of the ban on oil and gas exploration, and couldn't help but try to rib those wokesters across the way when Brownlee put his foot down. And it only took another minute for Brownlee to scold Seymour again, after the Act Party leader questioned whether Hipkins' caucus supported him. 'I think the acting prime minister can do better than that,' Brownlee said. 'The member's a very articulate man, I'm sure he can do better than he has.' And Seymour – being Seymour – only needed another minute to make another blunder by calling the opposition 'turkeys', for which the speaker made him withdraw and apologise. Another day in paradise. Afterwards, National MP Dana Kirkpatrick attempted to hand patsies to finance minister Nicola Willis to celebrate the beginning of the Depositor Compensation Scheme next week, but jeers from the opposition kept cutting over her. It was the Labour Party, trying to summon a former finance minister to claim his victory for actually coming up with the scheme in the first place. So, Chris Hipkins offered Willis a supplementary – who was the finance minister when this was passed into law? Well, Willis scoffed, how funny that those calling me 'desperate' for taking credit for this now want to take credit for it themselves. 'Well, that is flip-flop Hipkins for ya.' But after a small tug-of-war, Willis finally conceded that it was Grant Robertson (whose name received a roaring 'hooray!' from Labour) who was the finance minister at the time, and thus the scheme 'has the rare attribute that it was actually one thing he did that was helpful'. And then Winston Peters decided he wanted to butt in, too. 'Could I ask the minister,' Peters began, 'is she telling us that it's taken 19 long months for Mr Hipkins to find something commendable about Grant Robertson's time?' No, no, no, Brownlee ordered – now we're moving on. 'Urgency just turns the place upside down.' Greens co-leader Marama Davidson was up next with questions on bottom trawling, which Peters took in lieu of oceans and fisheries minister Shane Jones, who was away from the House. He did his best to dodge her questions, so when Davidson had the gall to use 'Aotearoa' instead of 'New Zealand', Peters told her there was no such country by that name that had pledged $16m to a global fund for coral reefs as she alleged – but some rumblings to Peters' right seemed to put him off. 'Are you sure?' Te Pāti Māori MP Tākuta Ferris asked him. 'Yes, I am positive,' Peters replied. 'Unlike you, you dickhead.' The remark was lost under the sound of Davidson's next supplementary, but after Ferris had a good laugh over it, he rose for a point of order. 'I've witnessed many times in this House disparaging comments being made between sides,' Ferris told the speaker, 'and I'm quite sure that being called a 'dickhead' would fall in line with that …' – he seemed to struggle to find the right word, and then it came to him: ' tikanga of the House, we might say, Mr Speaker.' 'So if Mr Peters wants to call me a dickhead across the alleyway here, I think that we should consider something for him,' Ferris offered. Well, I had no idea this even happened, Brownlee replied, but if Ferris found it offensive, the minister should withdraw and apologise – except it took another supplementary from Hipkins, and for Ferris to outright say 'I take personal offence to the comments made by Mr Peters over here calling me a dickhead', before the NZ First leader backed down, but only slightly. 'I apologise for calling him what I said he was,' Peters told the House. To get the ball back in the government's court, Seymour decided to rise for a point of order, to dob Ferris into the school principal for wearing the wrong uniform. Referencing Ferris and his Toitū te Tiriti shirt, Seymour asked the speaker, would he reflect on earlier rulings in relation to political motifs on shirts and badges, 'in relation to anything you may have seen in the last few minutes?' 'Yes, I certainly will,' Brownlee replied. There's only one thing Ferris could have been thinking: it really be your own people.
Scoop
21-05-2025
- Business
- Scoop
Depositor Compensation Scheme Transitional Provisions Standard Published
The Reserve Bank of New Zealand - Te Pūtea Matua has published a Transitional Standard, outlining how deposit takers must collect and store customer information in the event of a deposit taker failure so that they can ensure timely payments. The Deposit Takers (Depositor Compensation Scheme Transitional Provisions) Standard 2025 comes into force on 1 July 2025 and sets out how deposit takers should gather alternate bank details from depositors in the event of a failure, so that Depositor Compensation Scheme (DCS) payments can be made as quickly as possible. Deposit takers that provide online software for their depositors to view or manage their accounts, such as internet or mobile applications, must have a pre-positioned DCS depositor page that can be easily accessed on these platforms in the event of a failure. This requirement comes into effect on 1 July 2025 for non-mobile based platforms, and on 31 December 2025 for mobile-based applications. The DCS depositor page will be used to collect customers' alternate bank account details so that DCS payments can be made into an active bank account at another deposit taker. Having a prepositioned DCS depositor page improves the user experience in the event of a failure as depositors will be able to verify their identity through their normal online process and enter their alternate account details. This should make the payment process faster and reduce risks associated with having to verify the identity of depositors on a separate platform. The Transitional Standard also sets out an alternate model for collecting customer data if deposit takers can collect the required information more efficiently using a different approach. Deposit takers have the option to submit a written proposal to the RBNZ that outlines their proposed alternate method for collecting depositor information securely from authorised individuals other than via a DCS depositor page. The RBNZ consulted on a draft of this Transitional Standard between 6 December 2024 and 7 February 2025 and received 10 submissions from a combination of deposit takers and industry bodies.
NZ Herald
09-05-2025
- Business
- NZ Herald
Will new guarantee scheme mean non-bank deposits offer a golden ticket to higher returns?
So why shouldn't we all invest in non-bank deposits after July 1 – up to $100,000 per provider – given that if the finance company goes broke, we will be compensated under the DCS? To use another common saying – which apparently dates way back to one of Aesop's Fables – look before you leap! The Reserve Bank has published a list of deposit takers that will offer protected deposits at But it points out: 'Deposit-takers can offer a mixture of protected and unprotected deposits.' From July 1, deposit-takers will have to keep a list of protected deposits on their website 'and we recommend that people speak with their deposit-taker if they are unsure whether their deposits will be covered by the DCS', the Reserve Bank (RBNZ) says. There also are a couple of other issues: Will it be a hassle to get your money back if a deposit-taker fails – which is probably more likely for a non-bank than a bank? 'If a deposit-taker fails, depositors will be contacted by either the RBNZ or a third party (such as a receiver or liquidator on behalf of [the] RBNZ) with the steps they need to take to receive their DCS payment,' the Reserve Bank says. 'Depositors will need to set up a bank account at another deposit-taker if they don't have one already. They will be provided with instructions on how to submit these account details to the RBNZ so their DCS payment can be made. '[The] RBNZ will need time to process data that is received from the failed deposit-taker, to make sure all eligible depositors receive the correct amount they are entitled to, and to ensure compensation is being paid into the correct account.' How long might it take before you got your money back? 'The RBNZ will work to process DCS payments as quickly as possible, but it could take some time, especially for more complex cases,' the Reserve Bank says. It adds that it will advise on likely timeframes in its communication on a payout. Will the difference in bank and non-bank interest rates continue? When you emailed me, a week or so ago, you mentioned a finance company that was offering 5.8% on a nine-month term deposit. But when I checked whether that was still accurate, their rate had dropped to 5.1%. Logic tells us that non-bank deposit-takers won't have to offer such a big premium in their interest rates, for deposits of up to $100,000, once their customers are guaranteed to get their money back. The rates will probably still tend to be higher than banks offer, because people are less familiar with the companies, and there's the hassle factor mentioned above if they fail. But I predict the gap will lessen. Mind you, banks may also pay somewhat lower interest. Their term deposits will be more attractive – relative to other investments – because of the DCS, so there will be less need to entice people with high rates. What could go wrong? Q: In light of the start of the Depositor Compensation Scheme (DCS) on July 1 giving $100,000 protection to investors in term deposits, an expansion of the protections around KiwiSaver and other managed funds in the event of the failure of a bank that manages such funds might be helpful to your readers. Provided the fund is not directly invested in the same bank's products – say, it invests in a diversified share portfolio – the fund should not be significantly impacted if the bank fails. All that is needed is the appointment of some other fund manager – unless there is fraud or other criminal activity or, for example, inept management of fund member records, in play. However, if the fund invests in the same bank's term deposits, the fund will likely be severely affected. PIE fund term deposits in the same bank may well be a case in point, but I leave it with you to clarify or confirm that one. A: The DCS protects 'debt securities of eligible depositors', the Reserve Bank says. These include everyday bank accounts and savings accounts, term deposits and the like. It adds: 'Some banks offer cash and term PIEs that invest only in debt of that bank, and many depositors will view this interchangeably with regular call or term deposit products' and they may also be covered. 'Deposits-takers will be required to have a list of protected products, which may include cash and term PIEs' from July 1, 12025, the Reserve Bank says. As mentioned above, if in doubt, ask your bank or other deposit-taker. What about a bank's KiwiSaver fund that invests only in that bank's securities? I don't think there is such a creature, but what if one was created? 'No KiwiSaver funds are intended to be a captive cash PIE or protected by the DCS,' the Reserve Bank says. On the failure of a KiwiSaver provider, every provider has a supervisor, a separate company, that monitors what it does. I asked the Financial Markets Authority (FMA) several questions about this: What would happen if a KiwiSaver fund got into financial trouble? 'Under the law, fund managers are required to notify the supervisor if they are, or are likely to become, insolvent,' the FMA says. 'The supervisor is responsible for monitoring the manager's performance of its functions and obligations, as well as its financial position. 'In the event that the licensed fund manager becomes insolvent or is otherwise unable to continue operations, the supervisor has the power to appoint a temporary manager to ensure the continued management and operation of the fund until a permanent replacement is appointed. 'Importantly, investor assets are held separately in trust by an independent custodian (either the supervisor or a third-party custodian appointed by the supervisor, distinct from the manager) which provides an additional layer of protection.' Okay, but what might happen to KiwiSaver members' accounts if fraud or criminal activity was found? 'The licensed fund manager has a general duty to act in the best interests of investors, along with a specific fiduciary duty to exercise care, diligence and skill in carrying out its responsibilities,' says the FMA. 'Managers are expected to maintain appropriate systems and controls to manage operational risks, including those arising from fraud and criminal activity. The supervisor oversees the design and effectiveness of these controls to help safeguard investor assets from such risks. 'So where a loss arises due to fraud linked to a failure by the manager to exercise reasonable care and diligence, the manager may be held liable and required to compensate affected members.' There's an exception to this, though. 'If a loss results from a member's own actions – such as sharing log-in credentials or falling victim to a scam – the manager cannot generally be held responsible and the outcome will depend on a case-by-case basis.' Is it possible the manager could go bankrupt in the process, so that KiwiSaver members lose some of their money? 'It is possible, but in our view unlikely,' the FMA says. 'KiwiSaver providers are obliged to act with care, diligence and skill and this includes managing known risks. Typically, this will involve professional indemnity insurance, strong capital positions, a parent company guarantee or other similar arrangements. Supervisors are responsible for monitoring these arrangements.' What else could go wrong? Q: Recently, Australian superannuation funds have been hit by a cyber attack, and it makes me think about how secure our KiwiSaver retirement funds are in this digital world with artificial intelligence (AI) technology and deepfakes that could be so real. In a worst-case situation and if our providers are being hacked, are our funds insured and will the provider return the money lost through a cyber attack? A: KiwiSaver money is not insured. Still, while it's possible you could lose your money this way, it's unlikely, the FMA says. 'KiwiSaver providers are required to maintain robust business continuity planning and technology systems to mitigate risks such as cyber attacks,' it says, adding that this has been a standard license condition since July 1, 2024. 'Regulatory settings, supervision arrangements and insurance reduce risks to investors.' So, there we have it. In all these scenarios, KiwiSaver members could lose money – although it's unlikely. How does the FMA advise people to reduce this risk? 'The FMA encourages all members of KiwiSaver to remain engaged with their provider and financial adviser (if any) and to stay informed and exercise caution to protect themselves against scams and fraudulent activity. 'Many KiwiSaver providers provide useful information to raise investor awareness on safeguarding personal information and detecting fraud/scams. Good personal cyber security practices and vigilance are important complements to the broader regulatory protections in place.' Footnote: I hope you and other readers are comforted – rather than alarmed – by all this. I would hate to see people staying out of KiwiSaver for fear of something highly unlikely happening. If you're that much of a worrier, you probably shouldn't be in a car, train or bus either. The risk of harm while commuting or travelling is almost certainly higher. Surprisingly negative Q: I have just read the first Q&A in last week's column, 'Juggling finances', and your response was quite negative, which I find surprising as most if not all the time you come across as quite positive in your responses. At the end of the day, the things you pointed out – like the house falling down a cliff – never happened to the writer. If we all go about thinking like that then no one would ever take any risk on anything in life, let alone finance. After coming back from spending a few years in Australia, I finally get why us Kiwis are so negative about things. Maybe it's time you had a holiday. A: Thanks for your concern about my welfare! I do try to be positive about most things. But I'm not keen on someone saying how well they have done with their investments if it might lead to others copying their tactics but not their success. If positivity means encouraging people to take unnecessary risks they don't really understand – such as trying to time markets – count me out. As for the Aussies, I spent two years in Sydney a long time ago and enjoyed it. But they have their fair share of whingers. I'm happy to be back here. PS: this column has turned out to be rather gloomy. Will try for brightness next week! Keep account open Q: I know it's not ideal but I will soon need to withdraw most of my KiwiSaver balance. I am over 65 so this is possible and I have committed expenses. At this uncertain time, the current balance is fluctuating or falling. It has already fallen about $1000. I don't want to close the account as I hope to be able to add funds again in a few months. If I left say $500 in the account and it then fell again, will the account stay active until it recovers or I add more funds? A: By the time you read this – a couple of weeks after you wrote to me – your balance may have recovered. More importantly, over the years you've probably done pretty well. Most KiwiSaver members have. That aside, I agree that it's better to keep your account open. KiwiSaver is a good place for retirement money. And even if you leave just a few dollars in there in the meantime, your balance shouldn't go to zero unless all the fund's investments fail, which is hard to imagine. So yes, the account should stay active. * Mary Holm, ONZM, is a freelance journalist, a seminar presenter and a bestselling author on personal finance. She is a director of Financial Services Complaints Ltd (FSCL) and a former director of the Financial Markets Authority. Her opinions do not reflect the position of any organisation in which she holds office. Mary's advice is of a general nature and she is not responsible for any loss that any reader may suffer from following it. Send questions to mary@ Letters should not exceed 200 words. We won't publish your name. Please provide a (preferably daytime) phone number. Unfortunately, Mary cannot answer all questions, correspond directly with readers, or give financial advice.
