Proposed new duties for directors of deposit takers

Treasury has been consulting on proposed changes to the prudential framework for deposit takers in New Zealand. This includes a proposal to decouple key director responsibilities from the existing disclosure requirements and the attestation process through the creation of new high-level director duties that will apply in an ongoing manner. The following proposed duties for directors would be included in a new Deposit Takers Act (which will replace the Reserve Bank of New Zealand Act):

• to act with honesty and integrity, and with due skill, care and diligence
• to deal with the Reserve Bank in an open and honest manner
• to take reasonable steps to ensure that the deposit taker is being run in a prudent manner.

A shift in the individual liability framework, away from criminal penalties as the primary redress towards civil penalties has also been proposed (with criminal penalties reserved for very serious cases of recklessness or intent).

Alongside this, there will be an “executive accountability regime” that extends the individual accountability framework beyond directors to senior employees. This regime will apply to deposit takers and insurers, and will cover both prudential and conduct matters. This is being developed outside of the Treasury’s current consultation.

For more see our Submission on Phase 2 of the Reserve Bank Act Review – Consultation 3