Finance Minister Nicola Willis has announced that the levies paid by banks and other deposit takers will be risk-based, reflecting the size and likelihood of a payout.
The new Depositor Compensation Scheme (DCS) protects deposits up to $100,000 per depositor in case of a deposit taker's failure. The levies will be based on total deposits covered by the scheme, with larger institutions like the four largest banks expected to pay about three-quarters of the total. Credit unions and building societies will temporarily pay a flat levy until 2028.
The risk-based approach aims to balance the likelihood of a payout, entity soundness, and predictable payments. The Reserve Bank will collect levies and administer the fund, which will be used for compensation if needed. Finance Minister Nicola Willis plans to monitor competition impacts and potentially review legislation if necessary.