Depositor Compensation Scheme
From 1 July 2025 this new scheme will help protect customers' deposits.
What is the Depositor Compensation Scheme?
The Depositor Compensation Scheme (DCS) covers each eligible customer up to $100,000 per deposit taker (i.e. banks and non-bank deposit takers, including credit unions, building societies, and finance companies that take retail deposits) in the unlikely event the deposit taker goes out of business, and when the money is held in a DCS-protected account.
It's a Government scheme that is funded by deposit takers and administered by The Reserve Bank of New Zealand - Te Pūtea Matua.
Why is the scheme being introduced?
Following a review of New Zealand's financial system by the International Monetary Fund (IMF) in 2017, the introduction of deposit insurance was recommended, in line with most other OECD countries.
The Deposit Takers Act 2023 was subsequently established to create a single, modern regulatory framework for all deposit takers in New Zealand. The Depositor Compensation Scheme is one of the first initiatives under this act.
The scheme, implemented by the RBNZ, will support its financial stability objective: to help protect the stability of the financial system by regulating and supervising financial institutions.
It's worth noting, the RBNZ already impose some of the toughest capital requirements in the world on New Zealand banks. Meaning ASB, along with other New Zealand banks, are well placed if any financial disruptions were to occur.
Which customers and products are covered?
The majority of customers with eligible deposits will be covered by the scheme, including individuals, companies and trusts.
Details of the scheme are currently being finalised, however we expect that almost all ASB deposit accounts will be covered, including transactional and savings accounts, term deposits, the ASB Cash Fund, ASB Term Fund, and positive balances on certain lending products. The scheme is not expected to cover products such as KiwiSaver and non-NZD deposits.
We will publish a list of eligible deposit accounts before the scheme comes into effect.
How to find out more
For more information, please refer to the Depositor Compensation Scheme information available on the RBNZ website.