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Depositors compensation scheme to protect savings.
What's happening?
- The Reserve Bank will bring in a new depositor compensation scheme from mid-2025.
- The scheme will protect up to $100,000 of each customer’s money in each bank, credit union, building society or finance company (deposit takers).
- The scheme has been created under the Deposit Takers Act, passed into law in July 2023.
- Banks and other deposit takers will pay for the scheme, backed by the Government.
What it means for you.
Nothing is changing right now, and you do not need to do anything for your money to be covered once the scheme goes live.
You might like to update your contact details with all the banks and other deposit takers that you have accounts with.
The Reserve Bank is working on the details of the scheme. Their website says it will cover:
- individuals and organisations (companies, partnerships, trusts)
- up to $100,000 across savings, transaction and term deposit accounts in each bank, building society and credit union (deposit takers) registered in New Zealand
- if that deposit taker fails.
The scheme will likely not cover managed investments like KiwiSaver or bonds or financial services, local or central government accounts.
Why now?
The International Monetary Fund recommended the scheme - it brings New Zealand in line with other OECD countries and international best practice.
As well as the scheme, the Act also brings in licensing, standards and Reserve Bank checks for banks and other deposit takers to make sure they are stable, protect customers and prevent financial crisis.
New Zealand banks are among the best capitalised banks in the world and keep substantial buffers to protect customers from sudden changes in financial markets and the economy. These buffers are higher than the ones in place before the Global Financial Crisis, even though New Zealand banks didn’t suffer any material losses during the financial crisis.
Contact us.
If you have questions, get in touch at welcometeam@westpac.co.nz.