Depositor compensation scheme has taken effect
As of 1 July 2025, the new Depositor Compensation Scheme (DCS) is officially in place. This means that up to $100,000 per person, per institution is now automatically protected for eligible depositors in New Zealand.
The scheme covers money held in everyday transaction, savings, notice and term deposit accounts with licensed deposit takers – such as banks, credit unions, building societies and finance companies. These institutions must be licensed and supervised by the Reserve Bank of New Zealand (RBNZ).
Why does it matter?
Finance Minister Nicola Willis said the scheme gives Kiwis greater confidence in the safety of their hard-earned money. “People work hard for their savings. They deserve to know their money will be safe if the worst happens,” she said.
The DCS brings New Zealand into line with international standards and provides a financial backstop in the unlikely event that a licensed deposit taker fails.
Kerry Beaumont, the Reserve Bank’s Enforcement and Resolution Director, said the scheme would enhance financial stability and ensure faster compensation for depositors. While failures of financial institutions were rare, the scheme would offer peace of mind and clarity around what would happen if one occurred.
Who is covered – and what isn’t?
Coverage under the DCS applies to individuals, businesses and trusts – including children, provided the account is in the child’s name. Joint accounts are split evenly between holders. So, if two people jointly hold $200,000 with a covered institution, each would be entitled to $100,000 compensation.
However, not all financial products are included. KiwiSaver, managed funds, shares, bonds and foreign currency accounts are excluded. The scheme also does not cover losses due to fraud or scams.
How is it funded?
The DCS is funded by levies on licensed deposit takers and administered by the RBNZ under the Deposit Takers Act 2023. If required, a government backstop is available to support compensation payments in the event of shortfall.