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The design of the new levy, signalled in this year’s budget, to cover the costs to the Reserve Bank of New Zealand (RBNZ) of its prudential services is now open for consultation with submissions due by 16 October 2026.
It will apply to banks and non-bank deposit takers (Deposit takers), insurers, and designated financial market infrastructures (FMIs) and is timed for introduction in mid-2027, with levies being collected for the 2027-2028 financial year. The levy is expected to raise, initially, around $70m a year and will be reviewed every five years with options for out-of-cycle reviews.
The approach is in line with international practice and is similar to the approach taken by the Financial Markets Authority and the Commerce Commission (and as proposed for the Department of Internal Affairs from the 2027-28 financial year to part-fund the AML/CFT system).
Key proposals
The consultation proposes:
- full recovery of RBNZ’s prudential costs through the levy, instead of partial recovery
- application to all sectors and subsectors that are prudentially regulated by the RBNZ, with apportionment based on the level of frontline supervisory effort required for each sector, and
- methods for calculating the amount of the levy paid by regulated entities.
The proposed allocation is:
- deposit takers, 54% (approximately $37.8m per annum)
- insurers, 39% (approximately $27.3m per annum), and
- FMIs, 7% (approximately $4.9m per annum).
Feedback is sought on how costs should be allocated within these three sectors. We take you through the detail below.
Deposit takers
Four options are offered for the 41 deposit takers within the RBNZ’s jurisdiction:
- Option 1: flat amount of $921,951 per entity
- Option 2: total asset bands, with levies ranging from $638 to $7.6m
- Option 3: a rate of 0.0052452% applied to total assets, with branches paying a rate of 0.0010490% (one-fifth of the rate of locally incorporated deposit takers), and
- Option 4: a hybrid model combining a fixed amount ($50,000 for locally incorporated entities; $10,000 for branches) with a flat rate of 0.0047593% applied to total assets for both locally incorporated deposit takers and branches.
The RBNZ considers options 3 and 4 are stronger than options 1 and 2, and favours Option 4. However, branch banks and smaller locally incorporated deposit takers may prefer Option 3, which would impose a proportionately lower levy.
Insurers
Four options are proposed for the 66 insurers expected to be within the sector (following anticipated changes to the Insurance (Prudential Supervision) Act 2010 to remove overseas reinsurers and captive insurers):
- Option 1: flat amount of $413,636 per entity
- Option 2: total revenue bands, with levies ranging from $5,386 to just under $3m
- Option 3: a flat rate of 0.14824% applied to gross New Zealand revenue, and
- Option 4: a hybrid model combining a fixed amount of $30,000 with a rate of 0.13749% applied to gross New Zealand revenue.
Again, the RBNZ considers 3 and 4 the stronger options and favours Option 4. Unlike the position for deposit takers, there is relatively little difference for most insurers in levy costs between Options 3 and 4. The main impact of the fixed component in Option 4 would fall on very small insurers, for whom the $30,000 fixed component would make up the bulk of their levy.
FMIs
Two options are proposed:
- Option 1: a flat levy of $1.23m per FMI operator, or
- Option 2: rates based on an alternative metric or grouping.
The RBNZ favours Option 1. It considers a flat levy is pragmatic because each of the five designated FMIs are considered systemically important, and there is no shared metric that could reasonably be used to differentiate between them. Despite the RBNZ both operating and supervising two FMIs (the ESAS payment settlement system and NZClear securities settlement system), no levy discount is proposed for these FMIs.
Next steps
If you would like assistance preparing a submission or wish to discuss the potential impact of the levy on your business, please contact one of our experts.
