Plain language law

New Zealand law explained for everyone

Deposit Takers Act 2023

Consequential amendments

Schedule 1: Transitional, savings, and related provisions

You could also call this:

"Special rules to help the new law work with old laws and rules during a changeover period"

Illustration for Deposit Takers Act 2023

The Deposit Takers Act 2023 has some special rules to help it work with other laws. You need to know what these rules are so you can understand how the law applies to you. The law explains what happens during a special time called the transitional period.

The Bank can make some decisions during this time, like issuing a special notice to a deposit taker. This notice is used for the depositor compensation scheme, which is explained in Part 6 of the Act. The Bank can also use a special fund to support a deposit taker that is having trouble.

There are also rules about who can apply to be a registered bank or a licensed non-bank deposit taker. If you have already applied under the old law, your application will be treated as if you applied under the new law. The Bank can use information it got under the old law to make decisions under the new law.

Some deposit takers might be treated as if they are already licensed, even if they don't have a licence yet. This is to help them keep operating while they are waiting for their licence. The law also says what happens to existing registration of covered bond programmes and pending applications.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

This page was last updated on

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS469488.

Topics:
Money and consumer rights > Banking and loansBusiness > Industry rules
Previous

495: Consequential amendments, or

"Changes to other laws because of the Deposit Takers Act 2023"

Next

Schedule 2: Deposit takers, or

"People or businesses that borrow or lend money in New Zealand"

1Transitional, savings, and related provisions Empowered by s 8

1Provisions relating to this Act as enacted

1Overview

  1. Subpart 1 allows the depositor compensation scheme (and other provisions of Part 6 of this Act) to come into force before deposit takers are required to hold a licence under this Act.

  2. Subpart 2 provides for the licensing of registered banks and licensed NBDTs under this Act.

  3. Subpart 3—

  4. prevents applications for registration under the Banking (Prudential Supervision) Act 1989 or a licence under the Non-bank Deposit Takers Act 2013 from being made after section 16 comes into force; and
    1. provides for pending applications to be treated as withdrawn on the main commencement date.

      1. Subpart 4 provides for miscellaneous matters.

      2. This clause is only a guide to the general scheme and effect of this Part.

      2Interpretation

      1. In this Part,—

        core standards means the standards referred to in—

        1. section 79(a) (which relates to capital); and
          1. section 79(b) (which relates to liquidity); and
            1. section 86 (which relates to depositor compensation); and
              1. section 88 (which relates to the disclosure of information); and
                1. regulations made for the purposes of this definition

                  existing deposit taker means a person that is a registered bank or a licensed NBDT

                    licensed NBDT means a licensed NBDT under the Non-bank Deposit Takers Act 2013

                      main commencement date means the date on which section 10 comes into force

                        registered bank means a registered bank under the Banking (Prudential Supervision) Act 1989

                          statutory management means statutory management under the Banking (Prudential Supervision) Act 1989 or the Corporations (Investigation and Management) Act 1989

                            transitional period means the period that—

                            1. starts on the commencement of clause 3; and
                              1. ends when section 10 comes into force.

                              1Depositor compensation scheme

                              3Existing registered banks and licensed NBDTs treated as licensed deposit takers for purposes of depositor compensation scheme

                              1. During the transitional period, an existing deposit taker must be treated as being a licensed deposit taker for the purposes of—

                              2. Part 6 of this Act (which relates to the depositor compensation scheme); and
                                1. any other provision of this Act relating to the enforcement, application, or effect of Part 6 of this Act.

                                  1. The provisions referred to in subclause (1)(b) do not include sections 93 and 94 (directors’ and New Zealand chief executive officers’ due diligence duty).

                                  4Debt securities issued before issuer becomes licensed deposit taker are protected

                                  1. This clause applies to a debt security if—

                                  2. the issuer (A) is a licensed deposit taker (or an existing deposit taker); and
                                    1. the debt security meets the requirements of section 192(1) (and is not a security of the kind referred to in section 192(2)).

                                      1. However, this clause does not apply if the debt security has been cancelled, redeemed, or forfeited, or all of the obligations owing under the security have been discharged.

                                      2. The debt security is a protected deposit even if it was issued before A became a licensed deposit taker (or an existing deposit taker).

                                      5When Bank may issue specified event notice

                                      1. During the transitional period, the Bank may issue a specified event notice for the purposes of Part 6 in relation to an existing deposit taker (A) if—

                                      2. 1 or more of the following apply:
                                        1. A is put into liquidation under New Zealand law:
                                          1. a receiver is appointed in relation to the whole, or substantially the whole, of the assets and undertaking of A and the Receiverships Act 1993 applies to the receivership:
                                            1. A has become subject to statutory management; and
                                            2. the Bank is satisfied that—
                                              1. A’s financial or other difficulties are likely to cause serious and prolonged disruption to the ability of eligible depositors to deal with their protected deposits in accordance with their applicable terms and conditions; and
                                                1. issuing the notice is the most appropriate means to deal with that disruption.

                                                2. Section 194(2) to (4) and the rest of Part 6 of this Act apply with all necessary modifications in relation to the notice as if it were issued under section 194(1) (and, in the case of subclause (1)(a)(iii), as if the statutory management were a resolution).

                                                6Use of fund to support statutory management

                                                1. The Bank may authorise an amount to be paid out of the fund (as defined in section 191) for the purposes of supporting a statutory management measure undertaken or to be undertaken for an existing deposit taker (A) and meeting all other costs of the Bank in performing or exercising its functions, powers, or duties in connection with the measure if—

                                                2. the Bank is satisfied that eligible depositors are likely to receive, as a result of the statutory management measure, no less favourable treatment than would have been the case had the eligible depositors been paid compensation under subpart 3 of Part 6; and
                                                  1. the total amount paid out of the fund under this clause in connection with the statutory management of A does not exceed the maximum amount calculated under section 231.

                                                    1. In this clause, statutory management measure means any action taken by—

                                                    2. the statutory manager or managers; or
                                                      1. the Bank to further 1 or more of the purposes set out in section 259 in connection with A being subject to statutory management, whether the Bank performs or exercises its functions, powers, or duties under this Act or any other legislation (and that section applies with all necessary modifications as if references to resolution were references to statutory management).

                                                        1. For the purposes of this clause, Part 6 of this Act applies with all necessary modifications as if—

                                                        2. a statutory management measure were a resolution measure; and
                                                          1. the statutory management were a resolution.

                                                            1. However, section 233(2)(a) does not apply for the purposes of this clause.

                                                            7Depositor compensation and information disclosure standards may apply during transitional period

                                                            1. The Bank may make standards referred to in sections 86 and 88 that apply during all or any part of the transitional period.

                                                            2. The standards may apply to all existing deposit takers, a particular existing deposit taker, or a class of existing deposit takers.

                                                            3. For that purpose, subpart 2 of Part 3 and subpart 2 of Part 5 of this Act apply with all necessary modifications as if existing deposit takers were licensed deposit takers.

                                                            2Licences for registered banks and licensed NBDTs

                                                            8When Bank must issue licence to existing deposit taker

                                                            1. The Bank must issue a licence under this subpart to an existing deposit taker (A) if the Bank is satisfied that A—

                                                            2. has applied for the licence in accordance with clause 9; and
                                                              1. has the ability to comply with the core standards that will apply to A; and
                                                                1. the eligibility criteria (if any) that are prescribed by the regulations are satisfied.

                                                                  1. The licence must be treated as being a licence issued under subpart 2 of Part 2 of this Act.

                                                                  9Application for licence made by existing deposit taker

                                                                  1. An existing deposit taker may apply for a licence in the manner that is specified by the Bank.

                                                                  2. See subpart 4 of Part 8 of this Act (which provides for the Bank’s power to specify the manner in which an application is made).

                                                                  3Provisions relating to new deposit takers

                                                                  10Persons may not apply to be registered as banks or licensed as NBDTs after section 16 comes into force

                                                                  1. On and after the date on which section 16 comes into force, a person—

                                                                  2. may not apply to be registered as a registered bank under section 70 of the Banking (Prudential Supervision) Act 1989; and
                                                                    1. may not apply to be licensed as an NBDT under section 13 of the Non-bank Deposit Takers Act 2013.

                                                                        1. Example

                                                                        Company A wants to enter the market as a non-bank deposit taker. However, section 16 (which allows an application for a licence to be made) has come into force. A can no longer apply under the Non-bank Deposit Takers Act 2013. Instead, A must apply for a licence under this Act.

                                                                      11Licence holder may be treated as registered bank or licensed NBDT during transitional period

                                                                      1. This clause applies if a person (A) is issued a licence before the main commencement date.

                                                                      2. The Bank may issue the licence subject to a condition that A must be treated as being—

                                                                      3. a registered bank for the purposes of any provision or provisions of the Banking (Prudential Supervision) Act 1989 or any other specified legislation; or
                                                                        1. a licensed NBDT for the purposes of any provision or provisions of the Non-bank Deposit Takers Act 2013 or any other specified legislation.

                                                                          1. Until the main commencement date, A must be treated as being a registered bank or a licensed NBDT in accordance with the condition.

                                                                          2. This clause does not limit any prudential obligation that A has as a licensed deposit taker.

                                                                          3. If any prudential obligation conflicts with any obligation that A has by virtue of A being treated as being a registered bank or a licensed NBDT, the prudential obligation prevails.

                                                                          12Pending applications on main commencement date

                                                                          1. This clause applies if,—

                                                                          2. before the main commencement date, a person has—
                                                                            1. applied to be registered as a registered bank under section 70 of the Banking (Prudential Supervision) Act 1989; or
                                                                              1. applied to be licensed as an NBDT under section 13 of the Non-bank Deposit Takers Act 2013; but
                                                                              2. on that date, the application has not yet been determined.

                                                                                1. The application must be treated as withdrawn (and, accordingly, the Bank is not required to consider the application further).

                                                                                13Subpart prevails over former Acts

                                                                                1. This subpart applies despite anything to the contrary in the Banking (Prudential Supervision) Act 1989 or the Non-bank Deposit Takers Act 2013.

                                                                                4Miscellaneous

                                                                                14Existing statutory management continues

                                                                                1. This clause applies if, immediately before the main commencement date, a registered bank, a licensed NBDT, or an associated person of a registered bank or a licensed NBDT is subject to statutory management.

                                                                                2. The person continues to be subject to statutory management (and the Banking (Prudential Supervision) Act 1989 or the Corporations (Investigation and Management) Act 1989 (as the case may be) continues to apply) as if this Act had not been enacted.

                                                                                15First proportionality framework

                                                                                1. The Bank may perform any duty under section 77 before the commencement of that section.

                                                                                2. Any consultation undertaken before the commencement of section 77 that is of the kind referred to in section 77(4) must be treated as consultation required for the purposes of that section.

                                                                                3. The Bank must take all reasonable steps to ensure that the first proportionality framework under section 77 is published within 9 months after the commencement of that section.

                                                                                16Guidance on due diligence duty

                                                                                1. The Bank must take all reasonable steps to ensure that the guidance under section 97 is published within 6 months after the commencement of that section.

                                                                                17First statement of funding approach

                                                                                1. The Minister may perform any duty under section 246 before the commencement of that section.

                                                                                2. Any consultation undertaken before the commencement of section 246 that is of the kind referred to in that section must be treated as consultation required for the purposes of that section.

                                                                                3. The Minister must take all reasonable steps to ensure that the first statement of funding approach is issued before the first anniversary of the commencement of subpart 7 of Part 6.

                                                                                18First statement of approach to resolution

                                                                                1. The Bank must take all reasonable steps to ensure that the first statement of approach to resolution is issued before the first anniversary of the commencement of subpart 2 of Part 7.

                                                                                19Existing registered banks authorised to use restricted words in name or title

                                                                                1. If a person (A), immediately before the commencement of this clause, is a registered bank, the person must be treated as being authorised to use a name or title that includes a restricted word under section 428(a).

                                                                                2. Despite subclause (1), A must not use, without an authorisation from the Bank under section 428 or 429, a name or title that includes a restricted word in respect of a managed investment scheme of which A is a supervisor or a manager within the meaning of section 6(1) of the FMCA.

                                                                                3. This clause does not extend to a person carrying on any activity by means of, or through the agency of, a registered bank.

                                                                                20Existing registration of covered bond programme continues

                                                                                1. A covered bond programme that, immediately before the commencement of this clause, is registered under section 139G of the Banking (Prudential Supervision) Act 1989 must be treated as being registered under section 412 of this Act.

                                                                                21Pending applications for registration of covered bond programme

                                                                                1. This clause applies if,—

                                                                                2. before the commencement of this clause, a person has applied to register a covered bond programme under section 139E of the Banking (Prudential Supervision) Act 1989; but
                                                                                  1. on the commencement of this clause, the application has not yet been determined.

                                                                                    1. The application must be treated as an application made under section 410 of this Act and the Bank must consider the application in accordance with sections 411 to 415.

                                                                                    22Information obtained under former law

                                                                                    1. This clause applies to—

                                                                                    2. information supplied or disclosed to, or obtained by, the Bank (or an appointed person) under, or for the purposes of, or in connection with, the exercise of powers conferred by, the Banking (Prudential Supervision) Act 1989 or the Non-bank Deposit Takers Act 2013; and
                                                                                      1. information derived from or based upon information referred to in paragraph (a):
                                                                                        1. information relating to the exercise, or possible exercise, of the powers conferred by the Banking (Prudential Supervision) Act 1989 or the Non-bank Deposit Takers Act 2013.

                                                                                          1. The Bank and any employee of the Bank may use the information for the purposes of, or in connection with, the performance or exercise of any function, power, or duty conferred or imposed on the Bank by this Act or any other legislation (whether or not that purpose is connected with the purpose for which the information was supplied, disclosed, or obtained).

                                                                                          2. In this clause, an appointed person is a person appointed under the Banking (Prudential Supervision) Act 1989 or the Non-bank Deposit Takers Act 2013 to perform or exercise a function, power, or duty under that Act.