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Deposit Takers Act 2023

Depositor compensation scheme - Levies for depositor compensation scheme

239: Minister must also have regard to other levy principles

You could also call this:

"Minister must consider other important rules when deciding deposit compensation scheme costs."

Illustration for Deposit Takers Act 2023

When the Minister makes a recommendation about the deposit compensation scheme, you need to think about some important principles. The Minister must consider that the scheme should be paid for by licensed deposit takers, including any shortfalls. The Minister also needs to think about how much each type of deposit taker should pay, taking into account things like how likely it is that the Bank will need to step in to help a deposit taker, and how much it will cost to do so, as outlined in section 238 and subpart 5.

The Minister has to consider the costs, including the costs of the Bank issuing a notice or paying out money from the fund, as mentioned in section 238(2) and subpart 5. You should also think about how paying a levy will affect the deposit taker's financial health.

The Minister must also think about whether it's a good idea for the levies to be predictable, so deposit takers know what to expect, as mentioned in section 238(3)(a).

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS501300.

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Money and consumer rights > Banking and loansBusiness > Industry rules
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238: Levy regulations, or

"Rules about how banks pay their share of costs to the government"

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240: Minister must also have regard to statement of funding approach and Bank’s advice, or

"The Minister must think about the funding plan and the Bank's advice when making decisions."

Part 6Depositor compensation scheme
Levies for depositor compensation scheme

239Minister must also have regard to other levy principles

  1. The Minister must, before making a recommendation under section 238, have regard to the following principles:

  2. that the scheme should be fully funded by licensed deposit takers (including to meet any shortfalls to the fund):
    1. that the amount of levies for each class of deposit taker to be specified under section 238(3)(a) should take into account—
      1. the likelihood of the Bank issuing a specified event notice in relation to a deposit taker of that class; and
        1. the likelihood of the Bank authorising an amount to be paid out of the fund under subpart 5 in relation to a deposit taker of that class; and
          1. estimates of the costs referred to in section 238(2), including estimates of the costs in connection with the Bank issuing a specified event notice in relation to a deposit taker of that class and in authorising an amount to be paid out of the fund under subpart 5 in relation to a deposit taker of that class; and
            1. the effect that the obligation to pay a levy under this subpart is likely to have on the soundness of a deposit taker of that class:
            2. the desirability of predictability in levies.