$100,000 cap for deposit guarantee scheme
New rules to protect consumers’ savings.
If you’ve got savings in the bank, a new deposit guarantee scheme will help protect your money in the event the bank goes belly up.
Finance Minister Grant Robertson has announced the scheme will cover consumer deposits up to $100,000 per institution. Banks and other finance companies that take deposits from consumers will be included.
The $100,000 cap means the scheme will fully protect 93 percent of depositors, Minister Robertson said.
We’ve been calling for a deposit guarantee scheme for years. In our 2019 submission to The Treasury, we argued for the cap to be set at a minimum of $100,000 – double the $50,000 that was originally proposed.
We’re pleased our views were heard. This scheme will finally bring our laws into line with those in other OECD countries.
There’s a strong case for deposit guarantee schemes. They’re widely recognised as essential to maintaining consumer confidence in the banking system and supporting financial stability in the event of a bank failure.
Individual consumers are the least well placed to assess and mitigate the risks of bank failure. Consumers therefore look to regulators to ensure the banking system is sound and risks are managed appropriately. That’s where a deposit guarantee scheme comes in.
Legislation is expected to be introduced to parliament this year, with the scheme in place in 2023.
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