🏦 BanksWhat is the Depositor Compensation Scheme and what does it protect?
The Depositor Compensation Scheme (DCS) started on 1 July 2025. It guarantees your money on deposit if a licensed bank or non-bank deposit taker fails. It is run by the Reserve Bank of New Zealand and funded by levies on the institutions. Cover is up to $100,000 per depositor, per institution, it is automatic (you do not opt in), and it is a big change: before the DCS, New Zealand was one of the few developed countries with no deposit guarantee at all. In this article we go through exactly what is covered, how the limit works, and what to consider if you hold large amounts.
What is covered and how much
The scheme covers money in transaction accounts, savings accounts, term deposits and most other deposit accounts held with a licensed deposit taker — that includes the banks and also credit unions, building societies and some finance companies that take retail deposits. The limit is $100,000 per depositor, per institution, so if you hold accounts at two covered institutions you are protected up to that amount at each.
For a joint account, each account holder is generally covered for their share up to $100,000. The cover is automatic and applies to all new and existing deposits — you do not need to register or do anything.
What the scheme does not protect
Investments such as managed funds, KiwiSaver, shares and bonds are not covered by the DCS — they are not deposits. Their value can rise and fall with the market, and that is a normal risk, not something a guarantee scheme covers. Money in a non-licensed finance company or a peer-to-peer platform is also outside the scheme.
The DCS also does not protect you against low interest, against inflation, or against losing money on an investment. It applies only to the scenario where a licensed deposit taker itself fails.
If you hold large amounts
If you hold more than $100,000 on deposit you can spread the money across several licensed institutions to stay under the limit at each. Note that some brands are part of the same licensed entity — then they count as one institution, and the limit applies in total. The Reserve Bank publishes the list of licensed deposit takers and which brands belong together.
Because the DCS is new, it is worth checking that a provider offering a high deposit rate is actually a licensed deposit taker covered by the scheme before you put money in, rather than assuming it.
Frequently Asked Questions
- When did the Depositor Compensation Scheme start?
- 1 July 2025. Before then, New Zealand had no deposit guarantee scheme — depositors ranked as unsecured creditors if a bank failed. The DCS brings New Zealand into line with most other developed countries.
- Does the limit apply per account or per person?
- Per depositor and per institution, not per account. If you have three accounts at the same bank they are added together and protected as one, up to $100,000. For a joint account, each holder is generally covered for their share.
- Is KiwiSaver covered by the Depositor Compensation Scheme?
- No. KiwiSaver is an investment, not a deposit, so it is outside the DCS. KiwiSaver has its own protections — scheme assets are held by an independent trustee, separate from the provider — but the value still moves with the markets.
Informational content, not financial, tax or legal advice. Check amounts, limits and current rules directly with the official sources (Work and Income, the Reserve Bank of New Zealand, Inland Revenue, the Depositor Compensation Scheme) before making a decision.
