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Deposit Takers Act 2023

Regulation of deposit takers - Standards - Proportionality framework

77: Bank must prepare and publish framework for taking proportionality principle into account when developing standards

You could also call this:

"Banks must create a plan to make fair rules for different sized businesses"

Illustration for Deposit Takers Act 2023

The Bank has to make a plan called a proportionality framework. You can find this plan on the Bank's website. The plan explains how the Bank considers the principle of being proportionate when making rules for deposit takers, as mentioned in section 4(a)(i).

When making this plan, the Bank thinks about the size and type of businesses that deposit takers have. They also consider what rules are needed to keep each deposit taker safe and sound. The Bank looks at how important each deposit taker is to the financial system.

Before the Bank shares the plan with everyone, they talk to the people who will be affected by it.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS813729.

Topics:
Money and consumer rights > Banking and loansBusiness > Industry rules
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76: When procedural requirements do not apply, or

"When the Bank doesn't have to follow all the rules to make or change standards for deposit takers"

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78: Governance, incorporation structure, and ownership, or

"Rules for running and owning a company that takes people's money, like a bank"

Part 3Regulation of deposit takers
Standards: Proportionality framework

77Bank must prepare and publish framework for taking proportionality principle into account when developing standards

  1. The Bank must—

  2. prepare and keep up to date a proportionality framework; and
    1. publish a copy of the framework on the Bank’s Internet site.

      1. The proportionality framework must set out how the Bank takes into account, or proposes to take into account, the principle under section 4(a)(i) when it is developing standards.

        Guidance note

        The principle under section 4(a)(i) relates to the desirability of taking a proportionate approach to regulation and supervision.

      2. When preparing the proportionality framework, the Bank must have regard to the following:

      3. the size and nature of the businesses of different deposit takers:
        1. the extent to which a range of different requirements are necessary or desirable to promote the safety and soundness of each deposit taker:
          1. the relative importance of different deposit takers to the stability of the financial system.

            1. Before publishing the proportionality framework, the Bank must consult the persons, or representatives of the persons, that the Bank considers will be substantially affected by the framework.