Non-bank Deposit Takers Act passed

The Non-bank Deposit Takers Act 2013 was enacted in December, and is expected to come into force in May 2014.

The Act implements a new licensing regime for Non-bank Deposit Takers (NBDTs) to be overseen by the Reserve Bank of New Zealand (RBNZ). NBDTs include finance companies, building societies and credit unions. The Act aims to reduce the risk of a NBDT failing, and to prevent damage to the financial system in the event of a failure.

Prudential requirements currently in force for NBDTs include credit ratings, governance, risk management, capital, related party exposure limits, and liquidity. These requirements will substantially remain the same. However, the Act introduces suitability assessments of directors and senior officers of NBDTs, and restrictions on changes of ownership of NBDTs. Furthermore, the Act gives the RBNZ the power to detect imminent failures, and intervene if required.

Once the Act is in force, existing NBDTs will have 12 months to comply with licensing requirements.

Changes for charitable and religious organisations

RBNZ has recently completed a review of the treatment of charitable and religious organisations under the non-bank deposit takers regime. As a result, RBNZ proposes to exclude from the regime smaller charitable and religious organisations and provide larger organisations of this type with a transitional period to comply with specified aspects of the regime.

In the meantime RBNZ has extended the Deposit Takers (Charitable and Religious Organisations) Exemption Notice 2010 until 28 February 2014 (by the Deposit Takers (Charitable and Religious Organisations) Exemption Amendment Notice 2013) at which time it will be replaced by an amended exemption from the non-bank deposit takers regime. The notice has only been extended to deposit takers that are operating under the Securities Act (Charity Debt Securities) Exemption Notice 2013.

Deposit Takers (Non-trustee Entities Risk Management) Exemption Notice extended

The Deposit Takers (Non-trustee Entities Risk Management) Exemption Notice 2009 has been extended to 30 November 2016 by the Deposit Takers (Non-trustee Entities Risk Management) Exemption Amendment Notice 2013.

The principal notice exempts deposit takers that are not required to have a trustee (by virtue of an exemption granted by the Financial Markets Authority or an exclusion under the Securities Act 1978 or by virtue of the deposit taker not being required to have a trustee under the Securities Act) from the Reserve Bank of New Zealand Act 1989's requirement for a deposit taker's risk management programme to be reviewed by the deposit taker's trustee.