The government announced in August that it would extend the Crown Retail Deposit Guarantee scheme beyond October 2010 and change some of its terms and conditions.

The extended scheme will apply from 13 October 2010 until 31 December 2011. Like the current scheme, it will not cover defaults that occur after the guarantee period ends, even if the deposit was made during the guarantee period.

Under the extended scheme there will still be limits on what individual depositors (or “holders of debt securities”) can claim if an institution fails. These limits have been reduced. The depositor limit (for each depositor at an institution) has been cut from $1 million to $500,000 for deposits with a bank and to $250,000 for deposits with a non-bank institution (such as a finance company or a building society).

There have been other changes as well, such as how the rules will be interpreted for joint accounts and the fees institutions will have to pay to be included in the scheme.

Institutions have to apply to be members of the extended guarantee scheme. You will need to check with the institution if you intend to invest with it beyond 12 October 2010. Don’t just ask if they are part of the extended guarantee scheme, but check that the investment you intend to make is covered too. Institutions will be able to offer both guaranteed and non-guaranteed investments.

More information

• www.treasury.govt.nz - list of institutions participating in the Crown Retail Deposit Guarantee scheme

More from consumer.org.nz

• Don't assume your PIE is guaranteed - our April 2009 news item about Portfolio Investment Entities and the Retail Deposit Scheme

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