New Zealand's financial services industry will undergo a changing of the guard later this year when the Reserve Bank becomes the country's only prudential regulator.
The move comes as part of the New Zealand government's review of financial products and providers.
"Cabinet has decided that the Reserve Bank will become the single prudential regulator for New Zealand," a statement from the Reserve Bank said.
"This would widen the scope of the Reserve Bank's prudential functions to include the prudential regulation of non-bank deposit takers (NBDTs) and the regulation and supervision of insurance companies."
However, the bank's role will be limited to licensing, developing and enforcing minimum prudential and governance requirements and applying credit rating requirements.
The Securities Commission will retain its responsibility for authorising and supervising trustee corporations. It would also have responsibility for enforcing NBDT disclosure and advertising requirements under the Securities Act 1978, in consultation with the Reserve Bank.
"The functions of the Reserve Bank and Securities Commission are distinct and will not involve duplications of responsibility," the statement said.
"The Reserve Bank's role relates to prudential regulation setting, while the Securities Commission's role relates to market conduct and disclosure. In order to ensure effective coordination between the Securities Commission and Reserve Bank, there will be effective information-sharing and coordination arrangements."
It is intended that legislation to give effect to the new arrangements will be introduced later this year and enacted if possible in 2008. It is proposed that the new regulatory requirements will not come into force until a later date, possibly 2010.
