Dated at Wellington this 14th day of August 2009.
Statement of reasons
Note: the following statement of reasons should be read in conjunction with the statement(s) of reasons appended to:
This notice comes into force on 1 September 2009 and expires on 31 December 2012.
Section 157M of the Reserve Bank of New Zealand Act 1989 (the Act) requires entities that are deposit takers for the purposes of Part 5D of the Act to have and comply with a risk management programme on and after 1 September 2009.
Section 157N of the Act requires that the risk management programme must be provided to the deposit taker's trustee (under the Securities Act 1978) and must be amended if required by the trustee. This notice exempts deposit takers that are not required to have a trustee from these requirements under section 157N of the Act. The exemption is subject to conditions.
The Reserve Bank of New Zealand, after taking into account the principles set out in section 157F of the Act and satisfying itself as to the matters set out in section 157G(2) of the Act, considers it appropriate to grant the exemption because—
the additional direct and indirect costs of engaging a trustee only for the purpose of reviewing a risk management programme are unduly onerous and burdensome when compared to the benefits that a trustee would provide to the review process:
the benefit of this exemption is that unnecessary compliance costs are avoided for a class of deposit takers. This benefit outweighs the costs of—
inconsistent treatment between deposit takers that are required to have trustees and those that are not required to have trustees; and
the potential for less effective risk management owing to the absence of external review that would occur if the programme was reviewed by a trustee:
the condition that exempted deposit takers must supply a written statement to the Reserve Bank of New Zealand mitigates the risk posed by the absence of external review of the deposit taker's risk management programme. This also ensures that this exemption is consistent with the maintenance of a sound and efficient financial system:
this exemption only extends to deposit takers that do not have a trustee (by virtue of an exemption granted by the Securities Commission, an exclusion under the Securities Act 1978, or by not being required to have a trustee under the Securities Act 1978) and only applies for the purposes of review of the risk management programme. This ensures that this exemption does not go further than is reasonably necessary to address the concerns raised above.
Note: the preceding statement of reasons should be read in conjunction with the statement(s) of reasons appended to: