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Deposit Takers Act 2023

Depositor compensation scheme - Preliminary provisions

192: Meaning of protected deposit and related terms

You could also call this:

"What is a protected deposit and how does it work?"

Illustration for Deposit Takers Act 2023

In the Deposit Takers Act 2023, a protected deposit is a type of debt security issued by a licensed deposit taker. You have a protected deposit if the deposit taker promises to pay you back in New Zealand currency, or another currency allowed by the regulations. The rules of the debt security must also follow New Zealand law.

The deposit security must meet certain requirements set by the regulations, or be a type of security specified by the regulations. If it does, you have a protected deposit. However, some debt securities are not protected deposits, such as those issued from overseas offices or branches of a licensed deposit taker.

If you have a protected deposit, the amount of the deposit is the amount the deposit taker must pay you back, plus any interest you have earned up to that point, as explained in section 218. This means you can work out how much your protected deposit is worth at any given time by looking at the amount you were lent and any interest you have earned.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS501489.

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Part 6Depositor compensation scheme
Preliminary provisions

192Meaning of protected deposit and related terms

  1. In this Act, protected deposit means a debt security issued by a licensed deposit taker (B) if—

  2. payments of the principal and interest are only in—
    1. New Zealand currency; or
      1. a currency of a kind that is prescribed by the regulations (if any); and
      2. the terms of the debt security are governed by New Zealand law; and
        1. either or both of the following apply:
          1. the requirements prescribed by the regulations for the purposes of this paragraph are satisfied:
            1. the debt security is of a kind that is specified by the regulations for the purposes of this paragraph.

            2. However, protected deposit does not include any of the following:

            3. a debt security that is issued out of, or administered by, an overseas office or branch of a licensed deposit taker:
              1. a redeemable share (other than a redeemable share issued by a credit union, a friendly society, a co-operative company, or a building society):
                1. a debt security issued by a licensed deposit taker of a kind that is specified in the regulations for the purposes of this paragraph:
                  1. a debt security that is declared by the regulations not to be a protected deposit.

                    1. The amount of the protected deposit at a particular time is—

                    2. the principal to be repaid under the debt security as at that time; and
                      1. accrued interest for the debt security as at that time, if any (see section 218).