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Non-bank deposit taker law change that gives Reserve Bank more powers to be introduced to Parliament next week, English says

Non-bank deposit taker law change that gives Reserve Bank more powers to be introduced to Parliament next week, English says

Legislation to further tighten the rules for non-bank deposit takers (NBDTs) will be introduced to Parliament next week, in what is another step toward lifting investor confidence in New Zealand's financial institutions, Finance Minister Bill English says.

The Non-Bank Deposit Takers Bill will introduce licensing requirements and strengthen the Reserve Bank's powers, completing a new regulatory regime for NBDTs.

"From 2006, deposits of about NZ$8.6 billion were put at risk by finance industry failures," English said in a media release.

See's 'Deep Freeze' list of finance company failures and the amounts involved here.

"A key focus of 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," English said.  

"This bill completes that regulation. It gives the Reserve Bank the power to remove directors and issue directions in certain circumstances," he said.

The bill would require NBDT directors to notify the Reserve Bank if a director or senior officer triggered new prescribed suitability criteria. The Bank would have the power to remove those individuals.

The bill was expected to become fully effective on 1 June 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 in 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 disclosure requirements," English said.

"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," he said.

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