Are Investments Protected in New Zealand?
For British expats settling in New Zealand, understanding the financial system is essential for managing your money. As a financial advisor specialising in expat advice, I often highlight how banking and investments here differ from the UK. Here’s a clear rundown of the protections for your funds.
Banking in the UK: A Safety Net
In the UK, the Financial Services Compensation Scheme (FSCS) safeguards deposits in banks, building societies, and credit unions up to £85,000 per person, per institution (£170,000 for joint accounts). If a bank fails, your savings are protected up to this amount—a key feature giving depositors confidence.
Banking in New Zealand: No Equivalent
New Zealand lacks a deposit insurance scheme. If a bank collapses, your money isn’t automatically safe, which can surprise expats transferring large sums—perhaps for a home purchase. Stick to the big four banks (ANZ, ASB, BNZ, Westpac) for their stability and stronger credit ratings. Avoid smaller institutions promising higher returns, as you would be taking on more risk, and there’s no safety net to catch you.
Investments in New Zealand: Custodian Safeguards
KiwiSaver schemes and managed funds don’t carry a government guarantee, but they use independent, approved custodians to hold your assets. This separates your money from the provider’s finances. For instance, in an ANZ KiwiSaver fund, if ANZ failed, your investment remains secure with the custodian—not lost to creditors. It’s not a shield against market dips, but for portfolios over £85,000, it offers protection beyond the UK’s FSCS limit.
Key Takeaways for New Zealand Investing:
Banking: Without a deposit scheme in New Zealand, opt for major banks, especially for significant, temporary funds.
Investments: Custodians in KiwiSaver and managed funds safeguard your assets from provider insolvency—potentially better than the UK’s cap for larger amounts.
Navigating these differences can feel daunting, but awareness helps you manage your finances confidently. Please reach out if you would like financial advice.