Deposit Takers (Non-trustee Entities Risk Management) Exemption Amendment Notice 2013

2013/473

Coat of Arms of New Zealand

Deposit Takers (Non-trustee Entities Risk Management) Exemption Amendment Notice 2013

Pursuant to section 157G of the Reserve Bank of New Zealand Act 1989, the Reserve Bank of New Zealand gives the following notice (to which is appended a statement of reasons of the Bank).

Notice

1 Title
  • This notice is the Deposit Takers (Non-trustee Entities Risk Management) Exemption Amendment Notice 2013.

2 Commencement
  • This notice comes into force on 30 November 2013.

3 Principal notice
4 Clause 3 replaced (Expiry)
  • Replace clause 3 with:

    3 Revocation
    • This notice is revoked on the close of 30 November 2016.

5 Clause 4 amended (Interpretation)
  • In clause 4, definition of compliance period, paragraph (b), replace 30 November 2013 with 30 November 2016.

Dated at Wellington this 26th day of November 2013.

Grant Spencer,
Deputy Governor.


Statement of reasons

This notice, which comes into force on 30 November 2013, extends until 30 November 2016 the Deposit Takers (Non-trustee Entities Risk Management) Exemption Notice 2009 (the principal notice).

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. Section 157N of the Act requires that the risk management programme be provided to the deposit taker’s trustee (under the Securities Act 1978) and that the deposit taker amend the programme if so required by the trustee.

The principal notice exempts deposit takers that are not required to have a trustee from the requirements under section 157N of the Act. The exemption is subject to a condition.

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 renew 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 of 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 an external review, than would otherwise occur if the programme were 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 an external review of the deposit taker’s risk management programme. That condition 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 Financial Markets Authority or an exclusion under the Securities Act 1978 or by virtue of the deposit taker not being required to have a trustee under the Securities Act 1978) and applies only 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.


Issued under the authority of the Legislation Act 2012.

Date of notification in Gazette: 28 November 2013.

This notice is administered by the Reserve Bank of New Zealand.