Non-banks still need to prove their worth despite govt backing

Non-banks still need to prove their worth despite govt backing

Non-bank deposit takers both new and old will have to compete for the attention of advisors even with the backing of the government’s incoming insurance scheme for deposits.

Due to come into effect midway through 2025, the Deposit Compensation Scheme will guarantee deposits to a value of $100,000 for each customer per licensed deposit taker, with the aim of boosting confidence in the financial system. NBDTs, of which there are 14 licensed by the RBNZ and operating, are included in the scheme.

Asked whether the additional layer of protection for consumers would prompt advisors to give non-bank deposit takers more consideration, Financial Advice New Zealand chief executive Nick Hakes told Good Returns that advisors are unlikely to rule anything in or out based on the scheme’s protection alone.

“Advisors do the right thing by their clients, so they access research, they align the best solution or institution to the client’s needs.