NBDTs face new Government legislation
The Government is introducing the Non-Bank Deposit Takers (NBDT) Bill to Parliament next week to further tighten the rules for the non-bank sector.
Monday, 25 July 2011
Finance Minister Bill English said the Bill, which introduces licensing requirements and strengthens the Reserve Bank's powers, will complete a new regulatory regime for NBDTs and is another step in lifting investor confidence.
"From 2006, deposits of about $8.6 billion were put at risk by finance industry failures," English said.
"A key focus on this Government has been supporting measures to ensure the right protections are in place to lift investor confidence.
"Last year we implemented the first stage of prudential regulation for non-bank deposit takers - bringing in rules around credit ratings, risk management, governance, capital, related party exposures and liquidity.
"This Bill completes that regulation. It gives the Reserve Bank the power to remove directors and issue directions in certain circumstances."
The Bill will require NBDT directors to notify the Reserve Bank if a director or senior officer triggers new prescribed suitability criteria. The Bank will have the power to remove those individuals.
The Bill is expected to become fully effective on June 1, 2013, after a one-year transition period to enable existing NBDTs to meet the new licensing rules.
"This is part of a suite of measures designed to lift investor confidence on our finance sector and capital markets- we've established the Financial Markets Authority, put in place a new regime for financial advisers, required licensing of trustees and auditors and strengthened the disclosure requirements.
"We've also outlined our plans to extend the mixed ownership model to some state-owned enterprises to further lift confidence and invigorate our markets by providing fresh opportunities for Kiwi investors," English said.
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