The Reserve Bank has published two consultation papers on the implementation of the Deposit Takers Act 2023 (DT Act). The first consultation paper is on the use of "restricted words", being "bank", "banker" and "banking". The second consultation paper seeks feedback on the proposed regulatory perimeter of the DT Act.
The two consultation papers are related. The second consultation paper concerns which types of entities will be able to become licensed deposit takers and therefore authorised to use restricted words under the proposals contained in the first consultation paper.
The consultations will be relevant to:
- existing registered banks and licensed non-bank deposit takers (NBDTs);
- fintechs that offer bank-like services and products who may be interested in using restricted words; and
- overseas banks that rely on the current class authorisation regime to undertake limited wholesale activities in New Zealand.
In this insight, we summarise the proposals in the two consultation papers. If you have any questions about the consultation papers, or the implementation of the DT Act more generally, please get in touch with one of our experts.
Submissions on the consultations are due on 24 November 2025.
Consultation paper 1: Restrictions on the use of the word "bank"
Currently only registered banks and certain overseas banks that do not have a place of business in New Zealand and rely on a class authorisation are able to use the term "bank" in their name and in advertisements.
A key recommendation from the Commerce Commission's market study into personal banking services was that the Reserve Bank should review who is able to use the term "bank". Submissions claimed that the current restrictions hinder competition and confuse consumers – in particular, the inability of NBDTs that are prudentially regulated by the Reserve Bank and are covered by the Depositor Compensation Scheme to use restricted words. This workstream was identified as a priority by the Minister of Finance in her letter of expectations to the Reserve Bank.
The consultation paper contains two proposals:
- The Reserve Bank proposes that all licensed deposit takers (including those that operate as branches in New Zealand) will be authorised to use restricted words. This will include NBDTs (who cannot currently use restricted words) that become licensed deposit takers. Fintechs that provide bank-like products and services but that are not licensed deposit takers – and therefore not prudentially regulated and supervised by the Reserve Bank – would not be permitted to use restricted words.
- The Reserve Bank proposes to carry over the existing policy approach to authorising overseas banks that do not have a place of business in New Zealand by issuing a new class authorisation under the DT Act with broadly the same scope and conditions. The Reserve Bank is seeking feedback on whether other wholesale activities should be permitted under the new class authorisation.
The Reserve Bank intends to announce its final decision in early 2026. The Reserve Bank proposes that these changes will be effective once the DT Act is full in force (which is expected to be December 2028) and will be implemented via separate class authorisations.
Consultation paper 2: Regulatory perimeter
The DT Act will be an activities-based regime – meaning that every person who carries on business as a deposit taker must be licensed.
The definition of "deposit taker" is set out in clause 2 of Schedule 2 of the DT Act. Certain parts of the definition rely on details to be prescribed in Orders in Council and regulations to be made under the DT Act, which are the subject matter of the consultation paper.
The Reserve Bank is consulting on the following proposals:
- The Reserve Bank proposes that the existing classes of entities that have been declared not to be an NBDT for the purposes of the Non-bank Deposit Takers Act 2013 (NBDT Act) (e.g. intra-group funding vehicles, payment facility providers, special purpose vehicles and charities that meet certain criteria and Public Trust) will be declared not to be deposit takers for the purposes of the DT Act. This may not be necessary in every case given that the definition of "deposit taker" does not include "providing financial services" and therefore some entities that are currently caught by the NBDT Act may not be caught by the DT Act.
- The Reserve Bank does not propose to "declare in" fintechs that offer bank-like services and products that do not otherwise meet the definition of "deposit taker" (i.e. because they are not carrying on business of lending and borrowing). However, this would also mean that fintechs that do not meet the definition of "deposit taker" will not be entitled to use the term "bank" under the proposal in the first consultation paper. The Reserve Bank says that it will continue to monitor developments in the fintech sector to determine whether certain fintechs or classes of fintechs should be required to be licensed under the DT Act.
- The Reserve Bank proposes to introduce criteria to narrow the definition of "specified overseas entity" (which is one of the limbs of the definition of "deposit taker") to exclude overseas banks that have no physical presence in New Zealand. This proposal is intended to maintain the status quo regulatory perimeter whereby overseas banks that have a place of business in New Zealand are required to register as a branch in New Zealand while overseas banks that have no physical presence in New Zealand may rely on the class authorisation regime rather than become registered in New Zealand.