Non Bank Financial Institutions (“NBFI”) are companies that provide financial services but are not regulated and defined as a Bank. In New Zealand they are also commonly known as finance companies, credit unions and building societies.
NBFI in New Zealand are set up as like any normal commercial companies and are not specifically regulated like banks where a license to operate in the country is required from Reserve Bank of New Zealand (“RBNZ”). As long as these NBFI do not carry or advertise themselves with the legal definition and title of a bank, they can provide most of the financial services that a bank in New Zealand can provide with the need for licensing requirements. The RNBZ considers NBFIs as companies issuing debt securities for lending and financial service activities and are supervised by Trustee Companies instead but would need to comply with regulation set out by the RBNZ.
From September 2008, NBFI are brought under the prudential supervision of the RBNZ but final details are still going through the consultation process and will be fully implemented in 2010. (Refer to Chart 1 below for the Framework) The RBNZ new prudential regulation is expected to raise the standards of NBFI progressively.
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Chart 1 – Prudential Supervision Framework |
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