pc
nid 94531
Aug 11, 2026
pthandapani@vixio.com
New Zealand
Reserve Bank of New Zealand
financial services
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1713 charsNew Zealand Reserve Bank Opens Consultation on Prudential Levy for Financial Institutions
On August 11, 2026, the Reserve Bank of New Zealand – Te Pūtea Matua (RBNZ) released a consultation document on the introduction of a prudential levy. The consultation is being undertaken on behalf of the Minister of Finance and was announced as part of the Government's Budget 2026. The levy represents a decision in principle to shift the cost of prudential regulation to the financial sector.
The proposed levy would apply to banks, non-bank deposit takers, insurers, and financial market infrastructures. Section 296(1) of the RBNZ Act requires the Minister to ensure consultation with representatives of those liable to pay the levy or significantly affected by it before recommending regulations. The consultation covers three key areas: proposing full cost recovery under the levy for all prudential costs; the sectoral scope of the levy; and the method of calculating or ascertaining the amount of the levy paid by individual regulated entities. The levy aims to ensure that financial institutions bear the costs associated with prudential regulation rather than these costs being funded through general taxation.
The consultation period runs for ten weeks, with submissions due by 5pm on October 16, 2026. Following the consultation period, final Cabinet decisions are expected in early 2027. Interested parties can submit responses via the Citizen Space consultation platform or through the Beehive.govt.nz portal. The RBNZ has indicated it looks forward to engaging with the industry on these proposals.
REFERENCES:
Reserve Bank of New Zealand – Te Pūtea Matua. "Consultation on a prudential levy opens." August 11, 2026. https://www.rbnz.govt.nz/news/2026/08/consultation-on-a-prudential-levy-opens
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1913 charsNew Zealand Reserve Bank Opens Consultation on Prudential Levy for Financial Institutions
On August 11, 2026, the Reserve Bank of New Zealand – Te Pūtea Matua (RBNZ) released a consultation document on the introduction of a prudential levy.
The consultation paper details:
Cost recovery approach proposing a full cost recovery model, shifting the entire funding burden of the RBNZ's prudential function from the Crown's dividend to regulated financial institutions. This aligns with externality theory, meaning entities creating financial risks should pay to mitigate them, and maximizes fiscal benefits for the government.
Levy scope and sectoral allocation stipulating that the levy will apply to prescribed regulated sectors with no minimum size threshold, with a proposed allocation including 54 percent to deposit takers and 7 percent to financial market infrastructures (FMIs) based on frontline supervisory effort.
Intra-sector allocation options consulting on methods to distribute the levy within each sector. For deposit takers, the RBNZ prefers a hybrid model combining a fixed minimum component with a variable rate component based on total assets. For FMIs, the preferred option is a flat dollar amount divided equally among the four FMI operators.
Implementation and transitional arrangements planning for implementation in 2027, with the levy calculated annually in arrears. Due to impending regulatory perimeter changes, the RBNZ proposes an interim waiver for non-bank deposit takers (NBDTs) during the transitional period leading up to late 2028.
Administration proposing that the levy calculation methodology specified in regulations will be reviewed at least every five years, aligning with the RBNZ's five-year funding agreement (FYFA) with the Minister of Finance. The RBNZ also proposes provisions for relief arrangements, such as waivers or refunds, in exceptional circumstances.
Feedback may be submitted via email to Policy.Consultation@rbnz.govt.nz by October 16, 2026.