The Reserve Bank has released a consultation paper on the prudential regime for Non-Bank Deposit Takers (NBDTs). The consultation paper is part of a review of the prudential regime of NBDTs, required by the Reserve Bank of New Zealand Act 1989 to occur before 9 September 2013. NBDTs, like finance companies, building societies and credit unions, are an important part of the financial system in New Zealand by providing alternative deposit products and sources of funding for individuals and businesses. The Reserve Bank has regulated the NBDT sector, currently comprising 68 entities, since 2010 through requirements relating to credit ratings, governance, risk management, capital, related party exposure limits, and liquidity.
The consultation paper seeks to step back from the current prudential regime and assess its overall operation and efficiency. Feedback is sought on matters such as:
- the underlying objectives for the regime given the sector has changed since the regime was originally designed ;
- whether the current definition of NBDT accurately describes who should be covered by the regime and how the Reserve Bank has been managing boundary issues;
- whether the prudential requirements are appropriate and whether it is preferable to set rules through licensing conditions rather than regulations;
- whether a separate disclosure regime for NBDTs would be appropriate or whether it should be incorporated into securities law disclosures;
- the current offences and penalties for non-compliance and whether a hierarchy of penalties (including infringement notices) would be more appropriate; and
- crisis management powers and if a specific statutory management regime should be provided.
This consultation paper is released in the context of a proposed licensing regime for NBDTs currently before Parliament, and accordingly seeks any views on provisions in the Bill dealing with issuing, cancelling, and conditions on licences.
Submissions are due on 17 May 2013 and the Reserve Bank will report on the outcomes of the review to the Minister of Finance and Parliament. For further information and to read the consultation paper, see here. To read the NBDT Bill, see here.