As of 1 July 2025, the Depositor Compensation Scheme (DCS) has come into effect to protect the savings of individuals and businesses if a bank or other ‘deposit-taker’ fails. Managed by the Reserve Bank of New Zealand, the scheme is designed to strengthen public confidence in the country’s financial system and promote stability during times of economic stress.
Under the scheme, eligible deposits held with licensed banks, credit unions, and building societies are protected up to a limit of NZD 100,000 per depositor, per institution. This means that if a participating institution is unable to meet its obligations, depositors will be repaid up to the coverage limit.
The DCS covers common deposit products such as savings accounts, transaction accounts, and term deposits. However, it does not extend to investments such as shares, bonds, or managed funds (KiwiSaver and other superannuation schemes), nor does it cover deposits held with unlicensed or overseas institutions. The scheme will be funded by levies on participating financial institutions rather than taxpayers. This ensures that the cost of protection is borne by the industry itself.
By introducing the DCS, New Zealand joins many other developed countries that already have similar safeguards in place, giving people added confidence that their money is secure even in the event of a bank failure.